This paper presents a new concept of Static Synchronous COMpensator (STATCOM) based on a Hybrid Cascaded Multilevel Converter (HCMC). The HCMC consists of a two- level voltage converter and a wave-shaping circuit formed by cascaded H-bridge Sub-Modules (SM). Firstly, the operation principle and overall control strategy of HCMC are presented. After that, some key parameters including size of capacitors, numbers of sub-modules are in-depth analyzed. And then, a thorough comparison between the proposed HCMC-based STATCOM and conventional cascaded H-bridge based STATCOM is made, which turns out that the proposed HCMC-based STATCOM requires less number, size and stored energy of capacitors and has less power loss. Finally, a 35 kV/±50 Mvar HCMC-based STATCOM simulation model is constructed in PSCAD/EMTDC software platform. The simulation results validate the feasibility of the proposed HCMC-based STATCOM and the correctness of the analysis.