To improve the operation reliability of active power filter (APF) system, a novel diagnostic method based on the standardized line voltage error for open-circuit faults in a three-phase three-level parallel APF power switch is proposed. According to the line voltage error between the value in a normal state and that in a fault state, the fault diagnosis and location can be implemented through the analysis of the logical relationship between the error and the system’s control state signal and output current. To simplify the algorithm, the values of line voltage error are standardized with respect to the DC side. The set thresholds are compared with the diagnostic variables to eliminate the measurement error. Meanwhile, a time standard is used to improve the reliability of fault diagnosis. As a result, the fault diagnosis and location can be realized simultaneously. In addition, the time consumption is limited to several sampling periods, indicating that this method has characteristics of satisfying rapidity and reliability, and it is also suitable for the dynamic response process of the system. Simulation results verify the effectiveness of the proposed method.