Significant headway has recently been achieved in advanced high-temperature component design. Progress has been made in selecting a highly effective thermal insulating design composed of a titanium alloy piston with 1.0 mm thermal barrier coating which provides the same level of insulating effectiveness as a ductile iron piston with 2.5 mm coating. The low thermal conductivity of Titanium Alloy 6242 inherently provides a significant level of thermal resistance which effectively reduces the required coating thickness, reduces thermal stresses, and nearly eliminates coating thermal expansion mismatch. Other benefits of the titanium alloy piston include low weight and increased high temperature strength.Thermal rig testing has been completed on several plasma-sprayed zirconia coatings and a critical durability threshold thickness of 1.25 mm has been identified. In addition, zirconia coatings and chrome-oxide-densified Eirconia coatings have been screened in a small bore diesel engine. The only coating which remained free of visual surface cracks was the chrome-oxide-densified coating.This paper will present the second year's results and future plans of the low-heat-rejection engine component technology development program for high output military engines sponsored by the U.S. Army Tank-Automot ive Command (TACOM).