Modular multilevel converter (MMC) based high-voltage direct-current (HVDC) transmission system is a promising solution to the bulk power transmission over a long distance, especially for renewable energy integration. However, conventional half-bridge submodules MMC topology is susceptible to dc faults. In this study, dc short-circuit fault analysis and a review on recent advances in clearing dc fault current utilising different topologies are presented. Furthermore, the MMC can also work as a static synchronous compensator, producing reactive power to support the grid and improving the stability of the system when dc fault occurs. Finally, the comparison for different topologies in terms of device cost, estimated power losses, dc fault ridethrough capability, and reactive power compensation capability is given.