Abstract: Presented are hybrid electric vehicle (HEV) powertrains and control logic for optimized regenerative braking (regen), methods for making/using such systems, and HEVs with increased regen through reduced engine and transmission friction. A method of operating an HEV includes determining if an REV operating state or fault prevents engagement of a regen control operation and, if not, responsively determining if a torque request for the REV's powertrain is less than a road load on the HEV. The regen control operation is executed responsive to the torque request being less than the road load. The regen control operation includes the power transmission drivingly disconnecting the engine from the road wheels, and the engine operating at a target engine speed. A negative torque offset to maintain a vehicle deceleration rate after disconnecting the engine from the road wheels is calculated; the traction motor outputs a negative torque based on this negative torque offset.