A rear backup system for a vehicle includes a rear backup video camera and a display device operable to display video images viewable by a driver of the vehicle. When the vehicle transmission is shifted into reverse gear to commence a backup event, video backup images are displayed and an overlay is also displayed to guide the driver when hitching a trailer hitch of the vehicle to a trailer tongue of a trailer. When the trailer hitch of the vehicle is within the field of view of the rear backup video camera, the overlay guides the driver to connect the trailer hitch of the vehicle to the trailer tongue of the trailer. Display by the video screen of the video images continues during short term forward movement of the vehicle when maneuvering the vehicle to connect the trailer hitch of the vehicle to the trailer tongue of the trailer.