Numerous modern military and commercial vehicles rely on portable, battery-powered sources for electric energy. Due to their highly specialized functions these vehicles are typically custom-designed, produced in limited numbers, and expensive. To mitigate the power system's contribution to these undesirable characteristics, this paper proposes a modular power system architecture consisting of “smart” power battery units (SPUs) that can be readily interconnected in numerous ways to provide distributed and coordinated system power management. The proposed SPUs contain a battery power source and a power electronics converter. They are compatible with multiple battery chemistries (or any energy storage device that can produce a terminal voltage), allowing them to be used with both existing and future energy storage technologies. The internal power converter doubles as a charger, allowing the SPUs to be charged with standard power levels (e.g 120 V ac) via a convenient interface port, eliminating the logistical problems associated with batteries requiring unique chargers. Further, these SPUs are modular and may be arranged in vehicles having a wide range of sizes and dimensions. A prototype SPU design using a high energy density Li-ion cell has been developed and is presented here with proof-of-concept simulation results, comparisons to existing architectures, and a discussion of its advantages and disadvantages when compared with conventional systems. It is believed that the SPU concept could have wide-ranging applications including field equipment for sea-, ground- and air-based personnel, hybrid and electric vehicles, and small unmanned aerial (UAV) and underwater (UUV) vehicles.