For hybrid electric vehicles (HEVs), regenerative braking might be the most effective way of energy conservation. However, the braking energy usually cannot be regenerated completely due to the limit of the motor maximum torque. When the braking torque provided by electric motor (EM) cannot meet the driver’s braking demand, the hydraulic brake system should provide extra braking torque, which results in braking energy loss. Therefore, it is meaningful adjusting EM work point to maximize the regenerative energy by transmission downshifting. In this paper, an HEV equipped with an automated manual transmission (AMT) is chosen as the study platform. First, simplified dynamic models of HEV system are built. Then, the process and advantages of AMT downshifting are analyzed and the characteristics of regenerative braking are obtained with different gear positions and different, of which two kinds of downshifting strategy are proposed on basis. At last, hardware-in-loop tests are carried out, and results show that the energy conservation of regenerative braking process with downshifting can be increased by 10.5–32.4% compared to that without downshifting.