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A highly efficient two-motor plug-in hybrid system is developed to satisfy the global demands of CO2 reduction. This system switches three operation modes, what is called “EV Drive”, “Hybrid Drive” and “Engine Drive”, to maximize fuel efficiency according to the driving condition of the vehicle. Practical plug-in EV (Electric Vehicle) capability is also realized by adding a high-power on-board charger and a high capacity Li-ion battery to the original system. The outlines of the system components including a newly developed Atkinson cycle engine, a highly efficient electric coupled CVT (Continuously Variable Transmission) with built-in motor and generator, an integrated PCU (Power Control Unit) and an exclusive battery for plug-in HEV (Hybrid Electric Vehicle) are described in this paper. In addition to the switching of three driving modes and the efficiency improvement of each device, cooperative control of the hybrid system is introduced.