In this paper, an optimization algorithm of energy recovery efficiency is proposed for parallel hydraulic hybrid systems (PHHS) using dynamic programming (DP). Global optimal solution of pump displacement and transmission ratio under the known urban drive cycles is obtained by using the DP approach, where the total amount of energy recovery is defined as the cost function, and the pump displacement and the transmission ratio of the torque coupler are defined as the deciding variables. Two major steps are involved in verifying the proposed approach. Firstly, a PHHS Simulink model is accurately obtained by repeated comparison with the bench test. Subsequently, we derive a parallel hydraulic hybrid vehicle (PHHV) from adding a hydraulic hybrid system to an electric vehicle in ADVISOR (advanced vehicle simulator). This vehicle is used to validate the effectiveness of the proposed method in energy recovery efficiency.