We introduce sparse polynomial zonotopes, a new set representation for formal verification of hybrid systems. Sparse polynomial zonotopes can represent nonconvex sets and are generalizations of zonotopes, polytopes, and Taylor models. Operations like Minkowski sum, quadratic mapping, and reduction of the representation size can be computed with polynomial complexity w.r.t. the dimension of the system. In particular, for reachability analysis of nonlinear systems, the wrapping effect is substantially reduced using sparse polynomial zonotopes, as demonstrated by numerical examples. In addition, we can significantly reduce the computation time compared to zonotopes when dealing with nonlinear dynamics.