1. 2010 Toyota Prius. By nearly every measure (except maybe styling) the third-generation Prius is better than its two predecessors. It pulls off the hat trick of both being more fuel efficient and having more power. The New York Times' Jerry Garrett, who also made the Prius the top pick, praised its "50 miles per gallon fuel economy, more powerful engine, improved utility and new high-tech features, including solar roof panels that help cool the interior."
2. Ford Fusion Hybrid. I first drove this car in the "enchanted forest" installed in the basement of the Detroit Auto Show last year, but I've since had occasion to get better acquainted, and I really like what I see. The Fusion/Milan hybrid twins (starting at $27,270, with 41 mpg in town and 36 on the highway) are primarily responsible for Ford's uptick in hybrid sales, which are still in the toilet industry-wide. The Fusion is a worthy American alternative to the Prius. There's an available federal tax credit, and also a new nickel-metal-hydride battery pack (with 20 percent more power), enhanced electronic throttle control reducing the amount of fuel the car needs to restart, and a very efficient regenerative braking system.
3. BMW 335d. The $43,900 335d gets 23 mpg in the city but a stellar 36 on the highway (27 combined), and it also can deliver 0 to 60 in six seconds. On the highway, you'd never know the 335d was a diesel. It doesn't hesitate, it doesn't smoke, and it offers instant-on power and great handling. It's not cheap, but it's a very sophisticated machine that could convince you to consider a diesel. Another minor plus is a $900 federal tax credit. The VW Jetta TDI, which was the Green Car of the Year for 2009, is similar.
4. Honda Insight. I thought this might be my number one pick, but then I drove it. At $19,800, and with 41 mpg combined, the all-new Insight has a whole lot going for it. It's one of the most affordable hybrids, and completely practical--just not very exciting on the road, and with a somewhat bland interior (livened up by green leaves on the display). You won't be disappointed if you buy an Insight, but don't expect to be knocked out of your socks.
5. Honda Fit. The Fit is the best small car for sale in America, and I'm not just saying that because I own one (a 2007). In fact, the excellence of the Fit is why I don't own a hybrid car. Although the styling suffered some when the new model debuted this year, that's a subjective judgement. The car itself is improved in many ways, and still very affordable at $14,900. Fuel economy is hybrid-grade 28 mpg in the city and 35 on the highway. You'll pay $1,294 in annual fuel costs, and produce 5.9 tons of carbon dioxide in that same period.