This letter proposes a novel capacitor condition monitoring method for modular multilevel converters (MMCs) based on reference submodules (SMs). It significantly enhances the capacitor monitoring accuracy by making full use of the SM voltage sensor measurement range. Accuracy comparison between the existing method and the proposed method is conducted to quantify the improvement of accuracy. Moreover, its operation principle and practical implementation considerations are presented. Finally, a three-phase MMC platform is built to experimentally verify the effectiveness of the proposed method.