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The new control algorithm for parallel hybrid electric vehicle is presented systematically, in which engine operation points are limited within higher efficient area by the control algorithm and the state of charge (SOC) is limited in a range in order to enhance the batteries' charging and discharging efficiency. In order to determine the ideal operating point of the vehicle's engine, the control strategy uses a lookup table to determine the torque output of the engine. The off-line simulation model of 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 algorithm can effectively limite engine and battery operation points and much more fuel economy can be achieved than that of conventional one.