A multi-year Power System R&D project was initiated with the objective of developing an off-road hybrid heavy-duty concept diesel engine with front end accessory drive-integrated energy storage. This off-road hybrid engine system is expected to deliver 15-20% reduction in fuel consumption over current Tier 4 Final-based diesel engines and consists of a downsized heavy-duty diesel engine containing advanced combustion technologies, capable of elevated peak cylinder pressures and thermal efficiencies, exhaust waste heat recovery via SuperTurbo? turbocompounding, and hybrid energy recovery through both mechanical (high speed flywheel) and electrical systems. The first year of this project focused on the definition of the hybrid elements using extensive dynamic system simulation over transient work cycles, with hybrid supervisory controls development focusing on energy recovery and transient load assist, in Caterpillar?s DYNASTY? software environment. Three key off-road applications were the focus of the hybrid concept definition with an aim of understanding the system?s modular capability for the diverse off-road heavy-duty market. Core engine performance 1D and 3D simulations isolated the efficiency contributions from the downsized engine, turbocompounding, and in-cylinder thermal barrier coatings. A fuel consumption improvement range of 14 to 24% was predicted, resulting in successful project progression to the design and experimental validation phase. Furthermore, an overview of the experimental engine and hybrid system status concludes the discussion along with the multi-year project?s next steps.