Currently, the modular multilevel converter (MMC) is the most advanced voltage source converter topology. Because the MMC is a converter topology, the most common approach for controller design is considering the conventional converter model to design the controller accordingly. Though this approach ignores the internal dynamics of the MMC, the modular structure enables distribution of the capacitors in six arms of the MMC. However, this distribution leads to a complex internal dynamic that affects the controller operation and cannot be disregarded. In this study, a detailed fundamental and circulating current model of the MMC is developed while considering its internal dynamics. The detailed modelling reveals cross-and inter-couplings. On the basis of the detailed model and analysis of the couplings, three controllers have been proposed. Moreover, the performances of the proposed and conventional controllers have been analysed and compared under steady-state and active and reactive power changes. The proposed controllers are observed to achieve improved decoupling compared to that achieved by the conventional controller.