This study proposes a motor-controlled torque-vectoring differential equipped with electric hybrid functionality, hereinafter referred to as H-TD (Hybrid Torque-vectoring Differential). The mechanism of H-TD consists of an open differential, a planetary gearset, an electric motor, a clutch brake, and a clutch. The main difference between H-TD and preciously published TVD (Torque Vectoring Differential) systems is that it uses the electric motor to be able to not only distribute torque between output shafts, but also provide additional hybrid power. Hence, H-TD provides the possibility to integrate multiple functions into a single system. Furthermore, H-TD can be utilized in both hybrid electric vehicles and electric ones. Firstly, the constitution of H-TD mechanism is introduced, and three operation modes of the system, control strategy, as well as the dynamic models for the system are presented. Secondly, after considering the possible design requirements and the possible powertrain configurations of H-TD on four-wheeled vehicles, a set of feasible design parameters of the system is given. After completing the conceptual design of H-TD, this study uses a numerical simulation program prepared in MATLAB to verify the vehicle dynamic performance in different driving situations. The simulation scenarios include split-μ road test, constant cornering, slipping during acceleration, hybrid power acceleration, and hybrid regenerative mode. Numerical simulation results show that, compared to conventional final drive systems such as open differential, H-TD proposed in this study is capable of maintaining better traction force when the vehicle encounters slipping, and improving cornering performance of the vehicle. In addition, compared to other TVDs, H-TD can provide additional power performance and energy management due to its hybrid functionality. The results of this study have shown H-TD system could be an advanced differential system for improving vehicle dynamic performance.