A shift control algorithm of a newly developed two-speed gear shift system is proposed for electric vehicle applications. The algorithm is formulated according to the motor torque map and optimized to obtain the adequate propulsion characteristics for vehicle. Two speed gear system with shift control algorithm has proved greater efficiencies in terms of energy economy with its simplified hardware and software structures. The gear shifting is designed to be carried out by an actuator and the control signal from a vehicle control unit equipped with $mu$-processor. The results of performances and efficiency of the algorithm by simulation and vehicle test are described.