The two-mode hybrid system has several advantages over a one-mode EVT system: greater ability to transmit power mechanically and minimize electrical recirculation power, maximize fuel economy improvement and best meet demanding vehicle requirements. Extending the two-mode hybrid electric vehicle (HEV) to two-mode plug-in hybrid electric vehicle (PHEV) is significant not only to make the internal combustion engine (ICE)-based vehicle cleaner and more efficient in the near term, but also to provide a potential path to battery electric vehicles in the future. For PHEV, the enhanced electric drive capability is of vital importance to achieve best efficiency and best electric only performance.This paper describes the development of a prototype two-mode hybrid powertrain with enhanced EV capability (2MH4EV). The prototype drive unit includes an additional input brake to the existing General Motors FWD 2-mode HEV system. This enables two new electric-only modes in addition to the existing EVT modes and fixed gears. These two electric-only modes have the capability to cover the entire FTP urban cycle with a properly sized high voltage battery. Hardware design, systems and controls development are described in detail in this paper. Vehicle implementation, testing, and real world assessment of the enhanced electric-only propulsion, mode transition and drivability will also be presented.