The basic operation characteristics of modular multilevel converter (MMC) were introduced. Then the traditional nearest level modulation (NLM) was analyzed. An optimized modulation strategy was proposed, which could improve the output voltage levels of MMC from N 1 to 2N 1. The proposed modulation strategy could effectively reduce the harmonics of the output voltages, which enhancing the output performance of MMC. In addition, the investigated strategy could decrease the capacitor voltage fluctuation of submodules, which benefits to extend the life of the capacitor. Finally, the detailed simulation model was built on PSCAD/EMTDC to verify the effectiveness the proposed strategy.