The unified power flow controller (UPFC) based on modular multilevel converter (MMC) is the most creative flexible ac transmission system (FACTS) device. In theory, the output voltage of the series MMC in MMC-UPFC can be regulated from 0 to the rated value. However, there would be relatively large harmonics in the output voltage if the voltage modulation ratio is small. In order to analyze the influence of MMC-UPFC on the harmonics of the power grid, the theoretical calculation method and spectra of the output voltage harmonics of MMC are presented. Subsequently, the calculation formulas of the harmonics in the power grid with UPFC are proposed. Based on it, the influence of UPFC on the grid voltage harmonics is evaluated, when MMC-UPFC is operated with different submodular numbers and voltage modular ratios. Eventually, the proposed analysis method is validated using digital simulation. The study results would provide guideline for the design and operation of MMC-UPFC project.