Electrification and hybridization have great potential for improving fuel economy and reducing visual signature or soot emissions in military vehicles. Specific challenges related to military applications include severe duty cycles, large and uncertain energy flows through the system and high thermal loads. A novel supervisory control strategy is proposed to simultaneously mitigate severe engine transients and to reduce high electric current in the battery without oversizing the battery. The described objectives are accomplished by splitting the propulsion power demand through filtering in the frequency domain. The engine covers only low frequency power demand profile while the battery covers high frequency components. In the proposed strategy, the separation filter is systematically designed to identify different frequency components with the consideration of fuel consumption, aggressive engine transients, and battery electric loads. The proposed strategy is implemented into the series HEV simulation framework to assess its effectiveness under various driving cycles. The results show that the proposed power distribution strategy dramatically reduces battery current peaks and aggressive engine transients while maintaining the fuel economy to a competitive level. Longer battery life under the proposed strategy compared to the baseline thermostatic SOC control is explicitly evaluated through cumulative fatigue/damage analysis. The proposed strategy provides more flexibility in HEV design/optimization and enables battery downsizing, due to the extended battery safety margin and the reduced severity of engine transients.