As the energy crisis and environmental pollution continue to be a gradual threat, the energy saving of transmission systems has become the focus of railway vehicle research and design. Due to their high-power density and efficiency features, permanent magnet synchronous motors (PMSM) have been gradually applied in railway vehicles. To improve the efficiency of the transmission system of diesel railway vehicles, it is a good option to use PMSM as both a generator and traction motor to construct a full permanent magnet transmission system (FPMTS). Due to the application of the new FPMTS, some of the original control strategies for diesel railway vehicle transmission systems are no longer applicable. Therefore, it is necessary to adjust and improve the control strategies to meet the needs of FPMTS. We studied several key issues that affect the reliability and comfort of the vehicles. As such, this paper introduced the FPMTS control strategy, including the coordinated control strategy of the diesel and the traction motor, the two degrees of freedom (2DOF) decoupling current regulator, the maximum torque control of the standardized unit current, the wheel slip protection control, and the fault protection strategy. The experiment was carried out on the test platform and the test run of the diesel shunting locomotive equipped with the FPMTS. The results showed that the control strategy described in this paper met the operation characteristics of the FPMTS and that the control performance was superior. The study of FPMTS lays the foundation for the subsequent application of permanent magnet motors in high-powered diesel locomotives and high-speed diesel multi-units.