In a modular multilevel converter (MMC), the voltage balance among the submodules is mandatory to generate the multilevel stepped waveform across the load and to ensure the equal voltage stress on the semiconductor devices. In addition, the output power quality (voltage and current waveforms) and the converter reliability greatly depend on the design methodology of a voltage-balancing approach. The improper design of the balancing approach causes higher voltage and current harmonic distortion and device power losses, which further affects the efficiency of the MMC. In this letter, an improved voltage-balancing approach is proposed to reduce the output voltage harmonic distortion and device power losses. The performance of the proposed approach is verified through MATLAB simulations and experimentally on a three-level-flying-capacitor-based MMC system. Also, the performance of the proposed approach is compared with the existing methodology to prove its superiority.