In this paper, a new carrier phase-shift (CPS) modulation method based on switching the displacement angle (SDA) is proposed to compromise the harmonic content of the output voltage and the circulating current. It can be used in medium- and low-voltage applications where the AC-side voltage and DC-side current of the modular multilevel converter (MMC) are required to have low harmonic content simultaneously. In this proposed SDA-based CPS modulation, the carrier displacement angle of the MMC with N submodules in each arm is periodically switched between the values of 0 and π/N degrees, so that the harmonic content of the output voltage and the harmonic content of the circulating current will not be in extreme conditions, which occurs when the displacement angle is set to 0 or π/N degrees. The effectiveness of this method has been verified by simulation and experimental results.