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A new control strategy for parallel hybrid electric vehicle with ISG is presented in this paper, in which engine operation points are limited within higher efficiency area by the control strategy and the state of charge (SOC) is limited in a range in order to enhance the batteries' charging and discharging efficiency. The control strategy aims to reduce total energy consumption at each instantaneous time interval by dynamically adjusting the amount of power supplied by the engine and the pack of the batteries. The off-line simulation model of the parallel HEV power train is developed which includes the control system and controlled objective (such as engine, electric motor, battery pack and so on). The results show that the control stragegy can effectively limit engine and battery operation points and much more fuel economy can be achieved than that of conventional one.