Abstract: There is large value of second-order harmonic current that flows through the three phase arm of modular multilevel converter, namely circulating current, which not only influences the stability of the converter, but also increases the losses of HVDC system. In order to suppress the circulating current, a proportional reduced order resonant controller is proposed in this paper. Firstly, the negative double line frequency in circulating current is detected and extracted by the second-order generalized integrator, after which the three-phase circulating current is transformed to DC component by reference frame transform of three-phase to two-phase coordinates. Subsequently, the proportional reduced order resonant controller is applied to achieve precise tracking of circulating current, and the correction of reference voltage is obtained. This controller can accurately and rapidly extract the negative sequence two octave component and is simple to implement.