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The two-mode hybrid system has several advantages over a one-mode EVT system: greater ability to transmit power mechanically and minimize electrical recirculation power, maximize fuel economy improvement and best meet demanding vehicle requirements. Extending the two-mode hybrid electric vehicle (HEV) to two-mode plug-in hybrid electric vehicle (PHEV) is significant not only to make the internal combustion engine (ICE)-based vehicle cleaner and more efficient in the near term, but also to provide a potential path to battery electric vehicles in the future. For PHEV, the enhanced electric drive capability is of vital importance to achieve best efficiency and best electric only performance. This paper describes the development of a prototype two-mode hybrid powertrain with enhanced EV capability (2MH4EV). The prototype drive unit includes an additional input brake to the existing General Motors FWD 2-mode HEV system.