This paper proposes a condition monitoring scheme of submodule (SM) capacitors in the modular multilevel converters (MMC), which is based on the capacitance estimation using the information of the current and voltage ripples of the capacitors. In order to induce the voltage ripple in the capacitor, a controlled AC current is injected into the circulating current loop through the action of the average voltage control of each SM in the converter leg. The capacitor current is calculated from the arm current and its switching state. By processing these AC voltage and current with digital filters, the capacitance is estimated by a recursive least square (RLS) algorithm. The validity of the proposed scheme has been verified by simulation results for the 1-MW 7-level modular multilevel converter. Also, its feasibility has been proved by experimental results for a reduced-scale prototype.