The internal circulating current of modular multilevel converters (MMC) increases system losses and exacerbates distortion of bridge arm currents, thereby increasing system costs. Addressing issues such as oscillations and limited control accuracy in the sliding mode control (SMC) circulating current controller, this paper proposes a fuzzy sliding mode control (FSMC) circulating current controller based on traditional sliding mode variable structure control. Firstly, the special working characteristics of MMC are introduced, and the mechanism of MMC circulating current is analyzed. Then, the control principle of the fuzzy sliding mode circulating current controller is elucidated through modeling analysis and decoupling control. Subsequently, under the same conditions, simulation studies are conducted on MMC systems with traditional PI, SMC, and FSMC circulating current suppression strategies, respectively, under two different operating conditions: AC-side output disturbance and load transient. Finally, through simulation and experimental results, it is demonstrated that the FSMC circulating current controller outperforms the other two circulating current suppressors in terms of both circulating current suppression effectiveness and disturbance rejection capability, thereby enhancing system robustness, stability, and enabling rapid response operation.