Because of the sharp fluctuation of the load condition, the working points of the engine are mostly distributed in the high fuel consumption area. This causes low fuel economy of the power source and is the main reason of high power losses in conventional hydraulic excavators. In order to solve this problem, a new control strategy based on hybrid technology was presented. Its target was to achieve power matching and optimize the working condition of the power sources simultaneously. Experimental results show that the control strategy can realize the target. It reduce the speed fluctuation and optimize the working points of the engine. Meanwhile, it achieves higher fuel economy than conventional methods.