In order to obtain better economy and power performances of compressed natural gas (CNG) and electric hybrid city bus, the powertrain system is designed and studied in this paper. Based on manufacturing technology, operation cost and dynamic property, economy is regarded as the main optimization goal for CNG-electric hybrid city bus, which determines the structure of powertrain system of CNGelectric hybrid city bus. Vehicle control strategy is established by working conditions. Some key component parameters are matched and designed. Work model of motor/generator is established, and torque characteristic curve of motor/generator is obtained. Full vehicle model of CNG-electric hybrid city bus is established by ADVISOR software. Comparison with tradition natural gas city bus, the maximum gradability rises by 69.8%, the maximum gradability of 20 km/h is 25.4%, the maximum speed rises by 8.6%, and the acceleration performance of 0~50 km/h rises by 21.9%. The fuel consumption reduces by 23.3% in the BC-CTC cycle working condition, and the fuel consumption reduces by 25.1% in the ECE+EUDC cycle working condition. So, the performances of power and economy have been obviously improved, compared with traditional CNG city bus, which indicates that this method can be used to study the powertrain system of CNG-electric hybrid city bus.