Hydrostatic (hydraulic hybrid) drives have demonstrated energy efficiency and emissions reduction benefits. This paper investigates the potential of an independent hydrostatic wheel drive system for implementing a traction-based vehicle lateral stability control system. The system allows an upper level vehicle stability controller to produce a desired corrective yaw moment via a differential distribution of torque to the independent wheel motors. In cornering maneuvers that require braking on any one wheel of the vehicle, the motors can be operated as pumps for re-generating energy into an on-board accumulator. This approach avoids or reduces activation of the friction brakes, thereby reducing energy waste as heat in the brake pads and offering potential savings in brake maintenance costs.For this study, a model of a 4×4 hydrostatic independent wheel drive system is constructed in a causal and modular fashion and is coupled to a 7 DOF vehicle handling dynamics model. The integrated system model is then used to first verify component selection and hybrid control threshold settings for the independent drive system. Then, a vehicle stability controller is set up as a cascade of a yaw controller and a torque distribution strategy. The overall system is evaluated by simulating a reduced handling test maneuver. The energy recovery attributes of the independent drive system are clearly shown as changes in accumulator state of charge during the maneuver.