A power transfer system (10) for a vehicle to be driven by a prime mover through a first input drive shaft (12) and an electric motor through a second input drive shaft (14) carried by the vehicle. A power transfer system (10) supports the first and second input drive shafts (12, 14) to be mechanically interconnected to an output drive shaft (16) for driving driven wheels of the vehicle. A clutch (18) engages (18a) and disengages (18b) the first input drive shaft (12) with respect to the output drive shaft (16). A first output drive sprocket (24) is connected to the output drive shaft (16), a second output drive sprocket (22) is connected to the second input drive shaft (14), and an endless loop sprocket-engaging drive member (26) extends between the first and second sprockets (24, 22). A disconnect mechanism (20) engages (20b) and disengages (20a) the second input drive shaft (14) with respect to the output drive shaft (16). The disconnect mechanism (20) is located between one of the sprockets (24, 22) and its corresponding drive shaft (16, 14).