This paper describes the concept and a practical implementation of piston-compounding. First, a detailed computer simulation of the piston-compounded engine is used to shed light into the thermodynamic events associated with the operation of this engine, and to predict the performance and fuel economy of the entire system. Starting from a baseline design, the simulation is used to investigate changes in system performance as critical parameters are varied. The latter include auxiliary cylinder and interconnecting manifold volumes for a given main cylinder volume, auxiliary cylinder valve timings in relation to main cylinder timings, and degree of heat loss to the coolant. Optimum designs for either highest power density or highest thermal efficiency (54%) are thus recommended. It is concluded that a piston-compounded adiabatic engine concept is a promising future powerplant.