A hybrid vehicle and method of control are disclosed wherein the vehicle is propelled solely by the motor in some operating modes and the internal combustion engine is set to run whenever a brake pedal is released in other operating modes. In some operating modes, the engine is controlled to simulate a vehicle with a discrete ratio transmission, wherein the engine speed is controlled in response to vehicle speed and a virtual gear number. The virtual gear number changes in response to driver activation of shift selectors. When the driver selects a high gear number, a revised algorithm is utilized which allows some motor only operation but starts the engine in response to specified increases in accelerator pedal position.