The downsized ethanol Spark Ignited Direct Injection (SIDI) engine has proven to be one of the most promising concepts to reduce both the fuel consumption and pollutant emissions. In addition to this engine concept, the use of Fully Variable Camshaft Timing (FVCT) can provide the Internal Exhaust Gas Recirculation (I-EGR) into the combustion chamber. The Cooled Exhaust Gas Recirculation (Cooled - EGR) technique, has been adopted in order to reduce the NOx formation rate. However, through the FVCT system, acceptable levels of charge dilution by I-EGR can be achieved resulting in less fuel consumption and pollutant emissions. In this paper, the I-EGR technique has been investigated by carrying out an experimental analysis of a downsized ethanol SIDI engine running on boosted and unboosted conditions. The results at part load operation present a gain on fuel conversion efficiency due to the I-EGR dilution and the use of de-throttling technique. At the boosted operation an increase of fuel conversion efficiency was also achieved due to the use of I-EGR dilution combined with the intake tuning effect. The reduction of NOx formation due to the higher levels of I-EGR are presented in the results. The CO2 emission levels also presented a reduction caused by the decreasing of fuel consumption. However, the CO and HC emission levels presented an increase caused by an incomplete combustion process and due to a lower gas temperature into the combustion chamber. Therefore, the use of I-EGR through the FVCT system has been shown as alternative for reducing both the fuel consumption and the pollutant emissions.