With the high penetration of the power electronic loads in the grid, the stability of static synchronous compensator (STATCOM) devices is greatly challenged. However, the conventional control methods for the modular multilevel converter (MMC) based STATCOM only consider the stability with small signal disturbances. This article proposes a novel dual-layer back-stepping control (BSC) for the MMC-based STATCOM. In the first layer, the BSC aims to regulate the sum of the capacitor energy and the reactive output current. In the second layer, the BSC aims to control the circulating current. Therefore, the proposed method possesses a fast dynamic response and accurate tracking with the Lyapunov stability of the MMC-based STATCOM. Compared with the arm-control-based BSC for MMC-based inverters, the proposed method has a simplified structure and a reduced computation burden. Moreover, the proposed method realizes the independent control between the output current and the circulating current. The simulation and experimental results verify the effectiveness of the proposed method. In addition, its robustness toward different circuit parameters and the operation ability under unbalanced grid fault is also verified.