Regenerative braking in hybrid electric vehicles is an essential feature to achieve the maximum fuel economy benefit of hybridization. During vehicle braking, the regenerative braking recuperates its kinetic energy, otherwise dissipated into heat due to friction brake, into electrical energy to charge the battery. The recuperation is realized by the driven wheels propelling, through the drivetrain, the electric motor as a generator to provide braking while generating electricity. “Rigid” connection between the driven wheels and the motor is critical to regenerative braking; otherwise the motor could drive the input of the transmission to a halt or even rotating in reverse direction, resulting in no hydraulic pressure for transmission controls due to the loss of transmission mechanical oil pump flow. Because of the potential open or slipping torque converter and the multiple step ratios in the drivetrain, and the gear shifting transients in P2 parallel hybrid electric vehicles, special challenges for regenerative braking emerge. The challenges are primarily the torque converter clutch capacity controls, shift scheduling and shift controls, and the coordination between regenerative braking and friction brake controls. This paper describes the control challenges encountered during the regenerative braking development work and presents the design considerations to address these challenges. Finally, the experimental results are presented to demonstrate the performance of the developed regenerative brake controls.