Diesel exhaust emission levels have been measured during discrete transients in speed and load, and with changes made to the engine and fuel. Particulate, oxides of nitrogen, unburned hydrocarbon, and carbon monoxide measurements were made for two fuels, DF2 and 5 percent water-in-fuel microemulsion, for both a standard Caterpillar 3304 and a modified 3304 engine. Engine modifications included increasing compression ratio and retarding injection timing. This paper examines the effects of the water addition and engine modification on the steady-state and transient emission levels. In general, the addition of water decreased the particulate and oxides of nitrogen emission levels for the standard engine, but increased the levels of hydrocarbons and carbon monoxide. For the modified engine, the water addition resulted in a slight decrease in oxides of nitrogen and particulate matter at high speed and load conditions. The engine modification had a favorable effect on the exhaust emissions at high load conditions.