Internal combustion engines can be modified to operate regenerative braking cycles by using compressed air power. This paper presents a particular air hybridization design from among many possible configurations. The engine cycles are enabled by a highly flexible engine valvetrain, which actuates engine valves to generate desired torque with optimal efficiency. A lumped parameter model is developed first to investigate the cylinder-tank mass and energy interaction based on thermodynamic relationships and engine piston kinematics. Special consideration is given to the engine valve timing and air flow. A high fidelity, detailed model using the commercially available GT-Power software is developed for a commercial 10.8 liter heavy-duty diesel engine with a 280 liter air tank in order to capture the effects of engine friction, heat transfer, gas dynamics, etc. The model is used to develop optimal valve timing for engine control. The established engine maps are incorporated into the ADVISOR vehicle simulation package to evaluate the potential fuel economy improvement for a refuse truck under a variety of driving cycles. Depending on the particular driving cycle, the simulation has shown a potential 4% – 18% fuel economy improvement over the truck equipped with the conventional baseline diesel engine.