This research proposes a third-generation power control unit (PCU) for a two-motor hybrid system. To make a more compact intelligent power unit (IPU) to be located under the second seat, a PCU with a 12-volt DC-DC converter (DCDC) that mounts directly on the transmission was developed, whereas the DCDC was previously mounted within the IPU. Since this has a considerable impact on the engine room layout, the technology described below was used to make the PCU even more compact than the second-generation unit. The power module, a key component of the PCU, now uses Ag nanoparticles sintering bonding rather than conventional solder bonding. This helps lower thermal resistance and enables smaller power semiconductors. The voltage control unit (VCU) has a new circuit that uses a multi-stage switching circuit and electric power transfer capacitor instead of the conventional chopper circuit. This makes it possible to shrink the reactor to less than 65% of its usual volume without raising the carrier frequency, and enables a layout that efficiently uses both sides of the water jacket (W/J), so that no specially designed W/J needs to be added just for the DCDC. As for the W/J seal, friction stir welding (FSW) to increase rigidity was used to reduce seal width and to make the W/J itself more compact. The use of these compactness technologies enabled the PCU to maintain all the efficiency of a second-generation PCU and made it possible to build the DCDC in the PCU with its volume less than a second-generation one. Development of this PCU makes the IPU much more compact and provides a similar amount of trunk space as in a gasoline-powered vehicle.