Toyota Motor Corporation is developing a series of engines belonging to its ESTEC (Economy with Superior Thermal Efficient Combustion) development concept. This paper describes the development of 8NR-FTS after the subsequent launch of the 2.0-liter DI Turbocharged 8AR-FTS. 8NR-FTS is a 1.2-liter inline 4-cylinder spark ignition downsized turbocharged direct injection (DI) gasoline engine. By following the same basic concepts as 8AR-FTS engine , the 8NR-FTS incorporates various fuel efficient technologies such as a cylinder head with an integrated exhaust manifold, the Atkinson cycle using the center-spooled variable valve timing with mid-position lock system (VVT-iW), and intensified in-cylinder turbulence to achieve high-speed combustion. Instead of the D-4ST (Direct injection 4-stroke gasoline engine Superior version with Turbo) system that incorporates port and direct injection, this engine adopts the D-4T (Direct injection 4-stroke gasoline engine with Turbo) system that performs only DI in each cylinder. In combination with a single-scroll turbocharger, high torque is achieved from low engine speeds by cooperative control with the VVT system. This engine also adopts a stop and start control strategy that achieves speedy and shock-free re-start performance by starting the engine with stratified injection in the first compressed cylinder. The engine can be mated with either a 6-speed manual transmission (6MT) or continuously variable transmission (CVT). Especially with CVT, turbocharger lag duration is reduced by shifting control, and both fun-to-drive dynamic performance and excellent fuel economy are capable by switching two driving mode; “normal” or “sport”.