This paper describes the effects of two stage combustion strategy on the engine performance and the exhaust emission characteristics in a compression ignition engine. The two-stage combustion strategy targets reduction of NOx emissions by decreasing oxygen concentration for second stage combustion. Thus, the first injection was provided in order to consume in-cylinder oxygen, rather than generate power.A multi-dimensional CFD code was utilized to predict engine performance and emission characteristics. For the accurate and efficient computational calculation of ignition and combustion characteristics of diesel fuel, the reduced n-heptane mechanism was used in this study. The calculation for two-stage combustion was performed after validating against the experimental result. The KH-RT breakup model and gas-jet model was applied for the prediction of spray behavior and characteristics. To calculate the ignition and combustion process, CHEMKIN II  code was used. This mechanism was composed of 30 species and 65 reactions.It was revealed that the peak combustion pressure and the peak heat release rate in two-stage combustion strategy were reduced. It was due to the separate fuel injection and combustion. In the exhaust emission characteristics, two-stage combustion significantly reduced the nitrogen oxides (NOx) emission.