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This paper describes a new turbocharged diesel engine which has been developed to meet market requirements for better fuel economy for heavy-duty trucks in Japan. Besides the newly developed turbocharging system, the new engine features Isuzu's unique square combustion chamber, 4-valve design and roller tappets. Improvement of fuel economy and torque characteristics in the low and medium speed range was made possible mainly by adoption of a wastegate valve for boost control, computer designed exhaust system and matching of turbocharger characteristics with the square combustion chamber system and with Bosch type fuel injection system.