This paper proposed a control method for output and circulating currents of modular multilevel converter (MMC). The output and circulating current are controlled with the help of arm currents, which contain DC, fundamental frequency, and double frequency components. The arm current is transformed into a stationary reference frame (SRF) to isolate the DC and AC components. The AC component is controlled with a conventional proportional resonant (PR) controller, while the DC component is controlled by a proportional controller. The effective control of the upper arm and lower arm ultimately controls the output current so that it delivers the required power to the grid and circulating current in such a way that the second harmonic component is completely vanished leaving behind only the DC component. Comparative results of leg-level control based on PR controller are included in the paper to show the effectiveness of the proposed control scheme. A three-phase, five-level MMC is developed in MATLAB/Simulink to verify the effectiveness of the proposed control method.