Let be a connected graph of order and size , and let be an edge labeling of . Define an induced vertex labeling in terms of by , where the sum is computed in . If is one-to-one, then is called a modular edge-graceful labeling and is a modular edge-graceful graph. It is known that no connected graph of order with is modular edge-graceful. A 1991 conjecture states that every tree of order where is modular edge-graceful. In this work, we show that this conjecture is true and furthermore that a nontrivial connected graph of order is modular edge-graceful if and only if . The modular edge-gracefulness of a connected graph of order is the smallest integer for which there exists an edge labeling such that the induced vertex labeling is one-to-one. It is shown that for every connected graph that is not modular edge-graceful.