Modular Multilevel Converter (MMC) has recently become a popular multilevel topology for high-power applications, where the reliability performance is a crucial design consideration. In this paper the impacts of the circulating current in the MMC to the loss and thermal loading of power semiconductor devices are comprehensively investigated. Also a novel control strategy by utilizing the circulating current is proposed to enhance the reliability performance of MMC in order to limit the amplitude of thermal cycles. It is concluded that the circulating current may change the losses and thermal loading of the power devices, and by proper controlling the amount of circulating current, the temperature fluctuation or thermal cycling in the power device can be relieved, and thereby contributing to improved reliability performance according to many lifetime models/testing results for power devices.