The work reported in this paper contributes to understanding the effects of ethanol/gasoline ratio on mixture formation and cooling effect which are crucial in the development of EDI+GPI engine. The spray simulations were carried out using a commercial CFD code. The model was verified by comparing the numerical and experimental results of spray shapes in a constant volume chamber and cylinder pressure in an EDI+GPI research engine. The verified model was used to investigate the fuel vaporization and mixture formation of the EDI+GPI research engine. The effect of the ethanol/gasoline ratio on charge cooling has been studied. Compared with GPI only, EDI+GPI demonstrated stronger effect on charge cooling by decreased in-cylinder temperature. However, the cooling effect was limited by the low evaporation rate of the ethanol fuel due to its lower saturation vapour pressure than gasoline's in low temperature conditions. The cooling effect of EDI increased with the increase of ethanol/gasoline ratio until the ratio reached 58% (by volume). Further increase of ethanol/gasoline ratio did not improve the cooling effect, but left more liquid ethanol droplets in the combustion chamber by the time of spark. This could lead to incomplete combustion and explained the increased CO and HC emissions with the increase of ethanol content as reported in the experiments. The cooling potential and the completeness of ethanol evaporation were two completing factors that determine the final cooling effect of EDI. This implied the existence of ethanol/gasoline ratio 40-50% which can optimize the cooling effect and combustion performance.