This paper is the fourth in a series describing work sponsored by the Bureau of Mines to reduce diesel particulate and gaseous emissions through fuel modification. A stabilized water microemulsion fuel developed in previous work was tested in a Caterpillar 3304 NA four-cylinder engine with compression ratio and injection timing and rate optimized for this fuel to demonstrate the emissions reductions achieved. It was tested in both standard and optimum configurations with both baseline DF-2 and optimized microemulsion fuels. Gaseous and particulate data are presented from steady-state tests using a computer-operated mini-dilution tunnel and from transient tests using a total exhaust dilution tunnel.The optimized engine-fuel combination was effective in reducing particulates and oxides of nitrogen in steady-state tests. However, the standard engine-fuel combination provided the lowest particulate and NOx emissions in transient tests.