Abstract The Hybrid Multi-Terminal High Voltage Direct Current (H-MTDC) transmission system can take advantages of Line-Commutated Converter (LCC) technology to reduce capital cost and Modular Multilevel Converter (MMC) technology to eliminate commutation failure (CF) issues, and recently attracts much attention in academic research and practical engineering. Based on the scheme of Wudongde H-MTDC project, which is under construction in China, this paper develops a small-signal dynamic model of the hybrid 3-terminal HVDC system, adopting an LCC station at rectifier and two MMC stations at inverter. Then, the small-signal model is validated by comparing its time-domain responses with the detailed electromagnetic transient (EMT) simulation results obtained from PSCAD/EMTDC. Based on eigen-analysis and participation factor methods, this paper identifies the oscillatory modes of the overall hybrid system. From the revealed oscillatory modes, it indicates that DC-side active power relevant state variables and MMC internal harmonics have major contributions to low-damped modes which may result in instability of the system. Then, the effects of power-type controllers, i.e., constant DC current controller of LCC station, DC-side voltage controller of MMC station and active power controller of MMC station, and circulating current suppressing controllers (CCSC) of MMC stations on the stability of the hybrid system are investigated. Finally, the effects of AC system strength on the stability of the hybrid system are analyzed. The results show that smaller proportional gains of constant DC current controller of LCC and DC-side voltage controller of MMC can enhance the system small-signal stability. And the active power controller gain of MMC station has slight influences on the system stability. Moreover, the CCSC gains are required to be properly selected based on the system setup to prevent from the possible internal harmonic instability of MMC stations.