This paper presents the design and development of a megawatt-scale medium-voltage (MV) hybrid inverter prototype to validate its feasibility and potentials for the electric propulsion on the next-generation electric aircraft system with an onboard MV dc distribution, e.g., 3 kV dc bus in this work. The proposed hybrid converter consists of a three-level active-neutral-point-clamped (ANPC) stage using 3.3 kV silicon IGBTs cascaded with an H-bridge stage using cost-effective 1.2 kV SiC MOSFETs in each phase. Comprehensive design and evaluation of the full-scale prototype are elaborated, including the low-inductance busbar design, converter architecture optimization and system integration. In addition, a low computational cost space vector modulation with common-mode voltage (CMV) reduction feature is proposed to fully exploit the benefits of SiC MOSFET in this hybrid topology. Extensive simulation and experimental results are provided to demonstrate the performance of each power stage and the full converter assembly in both the steady-state operation and variable frequency operations. Compared with the widely adopted IGBT based ANPC converter in MV applications, the proposed 7-L hybrid inverter system features higher power efficiency, reduced harmonics, higher dc voltage utilization, reduced CMV and lower dv/dt, while remains cost effective compared to the solution using MV SiC MOSFETs.