In the power industry, hardware in-the-loop simulation (HILS) based on a real-time digital simulator (RTDS) is important technology for modular multilevel converter (MMC)-based high-voltage direct current (HVDC) power transmission. It is possible in real time to verify various fault situations that cannot be predicted by the software-in-the-loop simulation (SILS). This paper introduces the implementation methodology of sub-module (SM) capacitor voltage balancing for a MMC-HVDC physical control system based on field-programmable gate array (FPGA), which has the advantages of high-speed parallel operation and validates the reliability and accuracy of MMC-HVDC control when this control system is operated with RTDS. The characteristics of conventional capacitor voltage balancing methods, such as the nearest level control (NLC) with full sorting method, the NLC with reduced switching frequency method, and the tolerance band (TB) method, implemented on a physical control system based on this implementation methodology, are compared and analyzed. This paper proposes the improved capacitor voltage balancing method for MMC-HVDC transmission. Finally, the proposed capacitor voltage balancing method is compared with conventional methods to analyze performance in real-time to demonstrate that the proposed method is better than the conventional methods.