Hydraulic hybrid propulsion and energy storage components demonstrate characteristics that are very different from their electric counterparts, thus requiring unique control strategies. This paper presents a methodology for developing a power management strategy tailored specifically to a parallel Hydraulic Hybrid Vehicle (HHV) configured for a medium-size delivery truck. The Hydraulic Hybrid Vehicle is modeled in the MATLAB/SIMULINK environment to facilitate system integration and control studies. A Dynamic Programming (DP) algorithm is used to obtain optimal control actions for gear shifting and power splitting between the engine and the hydraulic motor over a representative urban driving schedule. Features of optimal control signal trajectories are then studied to derive implementable rules. System behaviour demonstrates that the new control strategy takes advantage of high power density and efficiency characteristics of hydraulic components, and minimizes disadvantages of low energy density, to achieve enhanced overall efficiency. Simulation results indicate that the potential for fuel economy improvement of delivery trucks with hydraulic hybrid propulsion can be as high as 47%.