Exhaust Gas Recirculation, EGR, is one of the most effective means of reducing NOx emissions from diesel engines and is likely to be used in order to meet future emissions standards. Exhaust gases can either be used to replace some of the air that enters the engine or can be added to the intake flow. The former case has been studied in this paper. One advantage of air replacement is that the exhaust mass flow is reduced in addition to the decreased NOx formation.The objective of this study has been to take a closer look at the factors affecting NOx emissions at different EGR rates. This is done by combining heat release analysis, based on measured pressure traces and NO formation in a multi zone combustion model. The model used is an improved version of an earlier presented model . One feature in the new model is the possibility to separate the NO formation during the premixed combustion from NO formed during the diffusive combustion. Another improvement is the addition of radiative losses in the sub model that calculates the local temperature.It is found that NO formation is influenced both by the change of heat release rate per se and the local conditions in the zones where NO is formed. The results indicate that the local equivalence ratio during combustion is decreasing with increasing EGR rate and thus reducing the effect of the EGR. It is also found that one possible reason for the increase in fuel consumption with EGR is intensification of radiative losses during the expansion stroke.