A comprehensive forward-looking powertrain model with an efficiency-based control strategy was developed to achieve real-time optimization of plug-in hybrid electric buses while considering the real vehicle drivability and the practical operation of all powertrain components under real driving conditions. The control strategy is based on a supervisory control algorithm that alternately employs charge-dominant control and discharge-dominant control to manage multiple powertrain sources, and enable an optimal overall efficiency-based powertrain operation state by maximizing the inherent optimal powertrain efficiency through best all transmission gear choice and the blend of motor and/or engine power. In the model, a component energy efficiency database was developed to rapidly enable an smart and optimal operating state determined from a set of efficiency maps characterizing the component and powertrain control states as a function of the instantaneous vehicle operational condition. The results revealed that the energy savings achieved with the innovative powertrain control improved by 10%–30% compared with the baseline hybrid powertrain control strategy. The benefits of eco-driving with respect to energy consumption were also evaluated using the powertrain model. The powertrain control model was implemented into a real hybrid bus. Measured energy savings with the optimized control strategy were similar to the simulated results.