Nowadays, the demand for energy saving and green emission of construction machinery, especially hydraulic excavators, has been highly increased. As a result, hybrid system, which are promoted and successfully applied to automobile industry, is recently introduced to hydraulic excavators. The aim of this paper is to propose a new energy saving electro-hydraulic Circuit design for the generation of potential energy of hybrid excavators. In this system, a Power storage component, electrical battery, is combined with a hybrid electro-hydraulic actuator using an electric motor, and an electrical generator as energy convention component. In addition, a control strategy, which is used to control the hybrid excavator to follow commands given by a driver and to optimize the energy saving process of the generator and battery, is also proposed in this paper. The effectiveness of the energy saving hybrid excavator is clearly proven by a series of experiments on a test rig including a bucket cylinder and analyses.