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Bioethanol is an established biofuel used today in sparked-ignited (SI) engines, however with limited fuel efficiency and stringent requirements on the ethanol purity (water content). In this paper, we will present the operation of a compression-ignition (CI) engine fuelled with upgraded hydrous ethanol. A specific fuel upgrade operation (excluding additives) converts a fraction of the hydrous ethanol to diethyl-ether, hence increases the cetane number up to adequate levels. The resulting upgraded fuel is tested in a commercial diesel engine (light-duty common-rail EURO IV model). In particular, the compression ratio is kept unchanged and only the injection timing is modified to ensure compression-ignition operation, securing the peak pressure at 8-12 degrees after top dead center.