This paper proposes a novel hybrid power-split transmission to drive hydraulic implements in construction machinery. The highly efficient power-split hybrid transmission is combined with displacement-controlled (DC) actuators to eliminate throttling losses within the hydraulic system and achieve higher fuel savings. The architecture design, sizing, and power-management are addressed. Simulation results considering a realistic truck-loading cycle on a mini-excavator demonstrate the feasibility of the idea. A systematic comparison between the proposed system and the previously developed series–parallel hybrid is also carried out. The paper compares engine operation and fuel consumption of the previously mentioned hybrid system with the original nonhybrid load-sensing (LS) machine. It is shown that by implementing an efficient engine operation control, the proposed system can achieve up to 60.2% improvement in fuel consumption when compared to the original machine and consume 11.8% less than the previously developed series–parallel hybrid with DC actuation. Other advantages of the proposed solution include a much steadier engine operation, which open to the possibility of designing an engine for optimal consumption and emissions at a single operating point as well as greatly reduce pollutant emissions. A steadier prime mover operation should also benefit fully electric machines, as the battery would not be stressed with heavy transients.