The battery fault-tolerant operation is one of the important issues for such a large-capacity cascaded H-bridge converter-based battery energy storage system(BESS). Conventional redundant method by bypassing whole SMs at ac-side may lead to insufficient modulation ratio margin and waste the potential of healthy H-bridge part. First, the comparison of ac-side bypassing submodules(SMs) with dc-side disconnecting cluster is made; and the concept of new battery cluster fault tolerance strategy is discussed. In order to give full play to the grid voltage support capability of the faulty module, a battery cluster fault tolerance operating control combining proposed fault-tolerant strategy and optimal zero sequence voltage injection is proposed in this paper. As a result, it can effectively enhance the capability of handling battery warnings and failure and is able to tolerate any number of faulty battery cluster modules. Besides, state of charge(SOC) balancing of healthy SMs and capacitor voltage balancing of faulty SMs are incorporated into control algorithm. At last, effectiveness of the proposed battery fault tolerance strategy is thoroughly verified in BESS of 10 kV/5 MW and 14 SMs per phase by MATLAB/Simulink simulations and hardware-in-loop experiment.