This paper proposes a framework for enabling the reliability-differentiated services in a residential distribution network with plug-in hybrid electric vehicles (PHEVs). A reliability-differentiated pricing mechanism is developed to satisfy the different reliability requirements of the customers while encouraging the customers to consume electricity in such a way that the reliability of the overall distribution system can be enhanced. A dynamic spinning reserve pricing scheme is developed to stimulate PHEVs to participate in spinning reserve by providing economic benefits when the state of the distribution system becomes risky. Based on the formulated reliability-differentiated system, a hierarchical game approach is proposed in this paper to coordinate the charging process of PHEVs in a decentralized fashion. At the upper level of the hierarchical game, an evolutionary game is formulated to optimize the management of vehicle-to-grid (V2G) capacity of each PHEV. Under the V2G strategies obtained from the evolutionary game, a noncooperative game is formulated at the lower level to coordinate the charging sequences of PHEVs. Various simulation studies are carried out to verify the effectiveness of the proposed hierarchical game approach. The simulation results show that the hierarchical game approach is effective in enhancing both reliability of the distribution system and economic profits of the PHEVs.