A system and method for modulating capacity of a scroll compressor having a motor includes determining a target capacity of the scroll compressor, operating the motor at a first speed when the target capacity is within a first predetermined capacity range and at a second speed when the target capacity is within a second predetermined capacity range, determining a pulse width modulation cyclic ratio based on the target capacity and the first or second speed, and periodically separating intermeshing scroll members of the compressor according to the pulse width modulation cyclic ratio to modulate the capacity of the scroll compressor.