This paper proposes a novel modulation technique for switching losses reduction in modular multilevel converters (MMCs). The MMC is considered as the development trend topology for medium- and high-voltage applications. However, the MMC requires numerous power devices to generate demanded output quality. Plenty of power devices generate enormous power losses for the system with requiring high cost and a large heat sink for each of the device. For that reason, this paper proposes the hybrid modulation method for the switching losses reduction in the MMC. The proposed modulation scheme combines fundamental-frequency modulation (FFM) scheme and phase-shifted carrier based pulse-width modulation (PS-PWM) scheme. In addition, an additional rotation method is included for voltage-balancing and power distribution among the sub-modules (SMs). Finally, the power losses of three-phase MMC are decreased with retained good output quality of the system. Simulation and experimental results are included to show and verify the performance of proposed hybrid modulation method.