A system and method for controlling a hybrid vehicle having an engine, a battery powered traction motor, and an automatic step-ratio transmission selectively coupled in series by a clutch include engaging the clutch to couple the engine and the motor and controlling motor torque to provide braking torque through the transmission to substantially maintain a cruise control speed. In one embodiment, a hybrid electric vehicle includes a battery powered traction motor connected to a transmission, an engine selectively coupled in series with the motor by a clutch, and a controller communicating with the traction motor and the engine and configured to control the motor to provide braking torque when the clutch is engaged and engine braking torque is insufficient to maintain cruise control speed of the vehicle as the vehicle travels downhill.