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This paper describes a new form of reciprocating engine and the work accomplished to date to investigate the capabilities and feasibility of this engine. This engine offers the substantial performance advantages that are thermodynamically possible when regeneration is applied to a low heat rejection (LHR) engine. Under a contract with the Naval Surface Warfare Center, a computer model that is capable of modeling the complex processes occurring in the LHR regenerated engine has been constructed. This model is being used to assess and examine the performance of various engine designs. In addition, design and materials issues associated with the most critical new component, the regenerator, are being investigated. Throughout this program, Caterpillar, Inc. has provided valuable technical support.