This paper presents an analysis of the operational characteristics of three-phase AC–DC matrix converters, which operate as rectifiers but possess a range of additional capabilities. These include the ability to reverse the power flow, control the input power factor, and generate a multilevel output voltage. The analysis yields a modulation strategy that minimizes switching losses. The proposed modulation strategy is compared with seven well-known space vector modulation strategies in terms of efficiency and distortion of input and output current. The performance is experimentally validated.