This paper describes an experimental study to determine the potential for fuel efficiency improvements offered by dedicated, high compression E85 engines with optimized powertrain calibration strategies. The study involved a prototype variable fuel engine that could operate using either gasoline or E85, and a high compression version of the same engine that was suitable only for E85. Fuel consumption and engine-out emissions were evaluated using steady-state engine dynamometer tests to represent urban and highway speed/load conditions.For each fuel and engine combination, the fuel efficiency and emissions trade-offs provided by varying Exhaust Gas Recirculation (EGR) levels were determined. For the high compression engine, operation at lower speed/higher load conditions (producing the same power as the standard speed/load settings) was also investigated. This was of interest because the opportunity would exist to trade off the improved acceleration performance of a dedicated E85 vehicle (due to the higher torque output of the high compression engine) for improved fuel efficiency using different driveline gearing.The dedicated E85 engine with optimized EGR levels was found to provide improvements in gasoline equivalent fuel economy of about 10% relative to the standard gasoline engine. Improvements of about 15% were possible when the dedicated E85 engine was downspeeded in proportion to its torque advantage over the gasoline engine. Despite the higher compression ratio and higher engine load (in the downspeeding case), it was possible to achieve lower specific NOx emissions than the gasoline engine while maintaining similar levels of Total Hydrocarbon Emissions. Factors responsible for this behaviour included inherently lower emissions with E85, as well as improved efficiency, greater EGR tolerance, and reduced spark advance requirements with the high compression engine.