A hybrid vehicle control system is configured to improve fuel economy by optimizing a torque transfer capacity of a clutch transmitting drive power from both an engine and a motor/generator while the motor torque provides at least part of the drive force. In particular, the system selectively controls a pair of clutches to switch between an electric drive mode and a hybrid drive mode. The torque transfer capacity of the clutch transmitting drive power from both the engine and the motor/generator to a drive wheel includes a motor/generator torque component and an engine torque component. The motor/generator torque component is determined based on a motor/generator torque and a torque transfer capacity margin allowance for the motor/generator torque. The engine torque component is determined based on an engine torque and a torque transfer capacity margin allowance for the engine torque when the drive wheel is driven at least by the motor/generator.