Multilevel converters have received significant interest recently as a result of their high power capability and good power quality. However due to the large number of sensitive components including power semiconductor devices and capacitors used in such circuits there is a high likelihood of component failures. This thesis considers one of the most promising multilevel topologies---the modular multilevel converter (MMC). Several methods are presented to detect and locate open-circuit faults in the power semiconductor devices in an MMC. These methods are based on sliding mode observers (SMOs). The signals used in the proposed methods are already available as measurement inputs to the control system and no additional measurement elements are required. An experimental MMC rig has been designed and built to validate these fault detection and isolation methods. The methods can be used with other multilevel converter topologies employing similar analysis and principles.