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Hybrid electric vehicles (HEV's) offer additional flexibility to enhance the fuel economy and emissions of vehicles. The Real-Time Control Strategy (RTCS) presented here optimizes efficiency and emissions of a parallel configuration HEV. In order to determine the ideal operating point of the vehicle's engine and motor, the control strategy considers all possible engine-motor torque pairs. For a given operating point, the strategy predicts the possible energy consumption and the emissions emitted by the vehicle. The strategy calculates the “replacement energy” that would restore the battery's state of charge (SOC) to its initial level. This replacement energy accounts for inefficiencies in the energy storage system conversion process. User- and standards-based weightings of time-averaged fuel economy and emissions performance determine an overall impact function. The strategy continuously selects the operating point that is the minimum of this cost function.