Aiming at simulating micro gas flows with accurate boundary conditions, an efficient hybrid algorithm is developed by combining the molecular dynamics (MD) method with the direct simulation Monte Carlo (DSMC) method. The efficiency comes from the fact that the MD method is applied only within the gas-wall interaction layer, characterized by the cut-off distance of the gas-solid interaction potential, to resolve accurately the gas-wall interaction process, while the DSMC method is employed in the remaining portion of the flow field to efficiently simulate rarefied gas transport outside the gas-wall interaction layer. A unique feature about the present scheme is that the coupling between the two methods is realized by matching the molecular velocity distribution function at the DSMC/MD interface, hence there is no need for one-to-one mapping between a MD gas molecule and a DSMC simulation particle. Further improvement in efficiency is achieved by taking advantage of gas rarefaction inside the gas-wall interaction layer and by employing the "smart-wall model" proposed by Barisik et al. The developed hybrid algorithm is validated on two classical benchmarks namely 1-D Fourier thermal problem and Couette shear flow problem. Both the accuracy and efficiency of the hybrid algorithm are discussed. As an application, the hybrid algorithm is employed to simulate thermal transpiration coefficient in the free-molecule regime for a system with atomically smooth surface. Result is utilized to validate the coefficients calculated from the pure DSMC simulation with Maxwell and Cercignani-Lampis gas-wall interaction models.