The modular multilevel converter (MMC) is attractive for medium- or high-power applications because of the advantages of its high modularity, availability, and high power quality. The fault-tolerant operation is one of the important issues for the MMC. This paper proposed a fault-tolerant approach for the MMC under submodule (SM) faults. The characteristic of the MMC with arms containing different number of healthy SMs under faults is analyzed. Based on the characteristic, the proposed approach can effectively keep the MMC operation as normal under SM faults. It can effectively improve the MMC performance under SM faults but without the knowledge of the number of faulty SMs in the arm, without extra demand on communication systems, which potentially increases the reliability. The time-domain simulation studies with the PSCAD/EMTDC are conducted and a down-scale MMC prototype is also tested with the proposed approach. The study results show the effectiveness of the proposed approach.