In order to fully implement the functionalities of modular multilevel converter (MMC), its fault-tolerant operation without redundant sub-modules (SMs) is comprehensively investigated. To avoid completely shut down the MMC system under SMs fault, a fundamental-frequency zero-sequence injection based neutral-shift method is adopted to enable the fail-safe energy transfer. This approach enhances both the reliability and availability of MMC while avoiding the undesired unbalanced stresses among the healthy SMs. Rigorous simulation studies are performed to demonstrate the validity and effectiveness of the proposed control methods.