This article introduces the modular multilevel ac/ac converter (M2AC) which capitalizes on a new partial power processing mechanism (P3M) to achieve direct voltage transformation in single frequency power systems. The proposed P3M allows direct voltage transformation using only half-bridge submodules (HBSM) by harnessing internally circulating dc currents to achieve the charge balance of the submodule capacitors. The M2AC represents a new class of modular multilevel converter (MMC) where, unlike with the classical back-to-back MMC, all submodules contribute to net ac power transfer. When contrasting this single-stage ac/ac conversion process with the ac/dc-dc/ac conversion process for the back-to-back MMC, the M2AC is shown to have a significantly lower semiconductor effort requirement. The article begins by using the classical dc-ac MMC structure to motivate the derivation of the M2AC. A detailed analysis of the M2AC's fundamental working principle is conducted with emphasis on the P3M. A dynamic controller is proposed that incorporates key functionalities such as output voltage regulation and submodule capacitor voltage balancing controls. The M2AC's principle of operation and the proposed controls are validated by simulation studies, and experimental tests performed on a laboratory-scale 250 Vpk, 1.25 kW prototype further confirm the efficacy of the novel P3M. The M2AC offers a new approach to voltage conversion in ac power systems that may be an attractive solution for certain distribution and transmission level applications, primarily where voltage regulation and power flow control are core objectives.INDEX TERMS Modular multilevel converter, direct ac/ac conversion, partial power processing.