This paper presents a hybrid Modular Multilevel Converter (MMC), which combines full-bridge sub-modules (FBSM) and half-bridge sub-modules (HBSM). Compared with the FBSM based MMC, the proposed topology has the same dc fault blocking capability but uses fewer power devices hence has lower power losses. To increase power transmission capability of the proposed hybrid MMC, negative voltage states of the FBSMs are adopted to extend the output voltage range. The optimal ratio of FBSMs and HBSMs, and the number of FBSMs generating a negative voltage state are calculated to ensure successful dc fault blocking and capacitor voltage balancing. Equivalent circuits of each arm consisting of two individual voltage sources are proposed and two-stage selecting and sorting algorithms for ensuring capacitor voltage balancing are developed. Comparative studies for different circuit configurations show excellent performance balance for the proposed hybrid MMC, when considering dc fault blocking capability, power losses, and device utilization. Experimental results during normal operation and dc fault conditions demonstrate feasibility and validity the proposed hybrid MMC.