This paper proposes the eddy-current braking & heating system, which is a novel efficient braking energy recovery system for electric bus. The system is designed to solve two problems: one is the low recovery efficiency of regenerative braking energy, another is the driving range dramatic decline of electric bus when heating the bus cabin in winter. The system converts braking energy into heating energy directly by the principle of eddy current braking and heating. It greatly improves the recovery efficiency of braking energy. The layout scheme of system is designed by considering the vehicle drive structure. The mathematical models of friction braking, regenerative braking, eddy-current braking & heating are established respectively. A blend braking control strategy considering braking strength, State of Charge, and supply air temperature is proposed. The energy saving evaluation parameters of the system are presented. A simulation platform is built in the MAMAS/Simulink environment. The simulation and vehicle tests show that the calculated temperature and driving range agree well with the measured results and the models are validated. Compared with Positive Temperature Coefficient heating, the recovery efficiency of braking energy of the system increases from 23.8% to 65.3%, and the improvement rate of driving range reaches 81.4%. The system can satisfy the braking requirement of electric vehicle by blend braking control strategy. The system can effectively increase energy recovery of the regenerative braking. It can solve the reduced driving range problem of electric buses while heating in winter.