Connected vehicle environment provides the groundwork of future road transportation. Researches in this area are gaining a lot of attention to improve not only traffic mobility and safety, but also vehicles’ fuel consumption and emissions. Energy optimization methods that combine traffic information are proposed, but actual testing in the field proves to be rather challenging largely due to safety and technical issues. In light of this, a Hardware-in-the-Loop-System (HiLS) testbed to evaluate the performance of connected vehicle applications is proposed. A laboratory powertrain research platform, which consists of a real engine, an engine-loading device (hydrostatic dynamometer) and a virtual powertrain model to represent a vehicle, is connected remotely to a microscopic traffic simulator (VISSIM). Vehicle dynamics and road conditions of a target vehicle in the VISSIM simulation are transmitted to the powertrain research platform through the internet, where the power demand can then be calculated. The engine then operates through an engine optimization procedure to minimize fuel consumption, while the dynamometer tracks the desired engine load based on the target vehicle information. Test results show fast data transfer at every 200 ms and good tracking of the optimized engine operating points and the desired vehicle speed. Actual fuel and emissions measurements, which otherwise could not be calculated precisely by fuel and emission maps in simulations, are achieved by the testbed. In addition, VISSIM simulation can be implemented remotely while connected to the powertrain research platform through the internet, allowing easy access to the laboratory setup.YouTube video embed with autoplay and mute