A new type modular multilevel dynamic voltage restore (MM-DVR) is proposed, its working principle is introduced and the topological structure and working principle of single phase modular multilevel converter are analyzed. The minimum voltage compensation strategy is adopted in modular multilevel dynamic voltage restore and its principle is elaborated. Several commonly used compensation strategies are compared. The principle and advantages of voltage sag detection method based on d-q conversion of voltages are introduced. The general modular multilevel converters (MMC) are compared, the nearest level modulation is chosen and its advantages adopted in dynamic voltage restore are analyzed. Through the simulation in PSCAD/EMTDC environment, the working characteristics and compensation effect of modular multilevel dynamic voltage restore are verified.