Modular multilevel converters (MMCs) operate in the low modulation index region in many applications. However, when utilized at the low modulation index region, large harmonics appear in the output voltage, which degrade the performance of the MMC. To improve the harmonic characteristic in the low modulation index, the carrier dynamic overlapping switching frequency optimal pulse width modulation (CDOSFOPWM) method is proposed for the MMC here. The whole modulation index region is divided into three regions: high modulation index region, middle modulation index region, and low modulation index region. The carrier amplitude, carrier overlap ratio, and frequency of triangular carriers are chosen dynamically according to the modulation index region of the modulation signals, to achieve the optimal harmonic characteristic in the whole modulation index region and maintain the switching loss. The number of on-state submodules (SMs) can be calculated by CDOSFOPWM, and the selection of SMs is performed by a reducing switching frequency voltage balancing algorithm. Finally, the proposed method is verified by simulation and experimental results.