Modular multilevel converter (MMC) has been widely used in HVDC transmission due to many outstanding advantages such as high degree of modularization and easy cascade expansion, but with the increase in the number of sub-modules (SM) connected in series on one bridge arm, the hardware cost rises and the device switching-loss increases, which restricts its development to a certain extent. In this paper, the idea of gradationally controlled inverter is combined with traditional MMC, the topology and working principle of a gradationally controlled MMC are analyzed, a stepwise nearest level modulation (NLM) strategy is proposed, and a simulation model of gradationally controlled MMC system is built on the Matlab/Simulink software platform to verify the feasibility of the stepwise modulation strategy in controlling output voltage levels on the AC side. According to the simulation results, it is proved that the application of gradationally controlled MMC can improve the output voltage waveform quality, reduce the switching frequency and lessen the system hardware cost in high-voltage and high-power occasions such as wind power generation and HVDC transmission.