Nowadays with the high fuel prices, the demands for energy saving and green emission of construction machinery have highly been increased without sacrifice of working performance, safety and reliability. The aim of this paper is to propose a new energy saving hybrid excavator system using an electro-hydraulic actuator driven by an electric motor/generator for the regeneration of potential energy. A 5 ton class excavator is analyzed, developed with the boom for the evaluation of the designed system. The hardware implementation is also presented in this paper. A control strategy for the hybrid excavator is proposed to operate the machine with a highest efficiency. The energy saving ability of the proposed excavator is clearly verified through simulation and experimental results in comparison with a conventional hydraulic excavator.