Recently, due to mounting concerns regarding the environment and energy conservation, demand for compact and hybrid vehicles with good fuel economy has been increasing. Toyota Motor Corporation has developed its first hybrid transaxle for installation in sub-compact class vehicles. This new hybrid transaxle is both smaller and lighter than the P410 hybrid transaxle for compact class vehicles, including the 2009 Prius. This was accomplished by creating new designs of the gear train, motor, and motor cooling system, and by adopting advanced technology. This paper describes the major features and performance of this transaxle in detail.