In this paper, the effect of temperature on online heath monitoring of dc capacitors in modular multilevel converters (MMCs) is studied. The submodule capacitance value is considered as the main indicator of health. Both self heating and ambient temperature are considered as sources of temperature variation. The study is conducted on a single phase MMC with full-bridge submodules. However, a similar analysis can be used for half-bridge MMCs and multiphase MMCs as well. The thermal behaviour of the capacitors is explained analytically and simulated using a simplified Cauer model. The effect of temperature on the estimated capacitance values is shown, and a method for reducing this effect is proposed. The results are verified using simulations in MATLAB/Simulink.