The combustion of ethanol in compression ignition engines reveals some attractive properties of this fuel, e.g. low black smoke, NOx, and hydrocarbon emissions. These results are confirmed by theoretical examination of the diesel combustion process. The direct use of ethanol in CI engines is enabled by ignition improvers, a variety of which is discussed in terms of their effectiveness, working mechanism, exhaust emissions, and economy. Vehicle tests over more than 1 million kilometers showed, among other favourable results, good fuel economy and low engine wear, but also ethanol-fuel-caused corrosion problems. Future development work will enable a further rise in specific power output and a reduction in fuel costs and could also open up possibilities of using ethanol derivatives as fuels for diesel engines.