AC-DC-AC modular multilevel converter (MMC) and direct AC-AC MMC are two kinds of interfaces to integrating AC motors into power grid, and they are easily damaged from large capacitor voltage fluctuation with varying motor speed. Up to now, none of the methods could balance the reliability and power density of MMC-based motor drives system. To find a better solution to this problem, a novel direct AC-AC MMC topology is proposed in this paper. Operating principle of this topology is introduced and relative multi-loop feedback control method is designed for it. Then, simulation and experiments are conducted for verification. Compared with the traditional MMC with high-frequency injection method, the proposed topology has no common-mode voltage problem and the current stress is reduced by 38.5%. Compared with the half-bridge-based AC-DC-AC MMC, the number of capacitors and inductors of the proposed topology is reduced by 20.8% and 25%. In comparison with the direct AC-AC MMC (modular multilevel matrix converter), the number of power devices of the proposed topology is reduced by 28%. The proposed topology has higher reliability and power density.