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A mode control strategy for a two-mode hybrid electric vehicle (HEV) with a fixed-gear mode is proposed, considering wheel torque demand while minimizing fuel consumption. First, the dynamic equations of a power-split HEV are derived, and these equations consist of two electrically variable transmission modes and four fixed-gear modes. Using the dynamic equations, the optimal operation mode is selected from the viewpoint of the maximum available output torque with respect to the driver's demand and vehicle velocity. Next, an optimized mode selection map is constructed using optimization to minimize fuel consumption while satisfying the required wheel torque. We note that fixed-gear mode uses the fixed-gear mode 1 to implement a higher gear ratio if the vehicle speed is low and if the required output torque is large, as in a conventional automatic transmission shift map, and selects the fixed-gear mode 4 to implement a lower gear ratio if the vehicle speed is high and if the required output torque is low. A vehicle simulation was performed to verify the mode control algorithm of the two-mode HEV, and the results were compared with vehicle experimental results. The simulation results showed that the mode control strategy for the two-mode HEV gave satisfactory performance, similar to the experiment results.