The air hybrid engine with dual chamber cylinder with an air storage tank is an energy recovery unit from deceleration and breaking the vehicle and will perform as power management. During deceleration mode of a vehicle where the compressor chamber in the engine will recover energy by compressing the air and storing the compressed in a storage tank. During acceleration mode the engine will run in a mixed mode, conventional mode and air motor mode. The compressed air can also be used for starting the engine. The engine will operate in the “sweet spot” to optimize fuel consumption by using the lower chamber and or upper chamber in compression mode or an idle mode. The compressed air from the air storage tank can be used for other purposes such as air suspension and or to power pneumatic tools.