Due to its excellent modularity and scalability, the cascaded H‐bridge solid‐state transformer (CHB SST) is a prominent candidate for interconnecting different grids in future hybrid ac/dc distribution systems. However, the CHB SST's large number of power switches are potential sources of faults that can disrupt the system's normal operation. Among other failure modes, a power switch open‐circuit fault (OCF) in a dual active bridge (DAB) module in the SST can result in overcurrent and previously ignored DAB high‐frequency transformer (HFT) saturation issues. The fault is generally addressed by installing redundant modules or additional devices, which would increase the cost, size, and complexity of the system. Based on the OCF analysis presented in this paper, a fault‐tolerant scheme using dc current injection and phase shift ratio adjustment is proposed to maintain the CHB SST operation with maximum remaining bidirectional power transfer capability of the faulty DAB. The overcurrent and HFT saturation issues are also eliminated. The proposed scheme features less cost and volume as compared with module redundancy methods. Moreover, it does not require modifications in the configuration and implementation of the SST. The feasibility and effectiveness of the proposed scheme are verified through a 4.8 kVA CHB SST experimental platform.