In order to reduce exhaust emission and combustion noise and to improve fuel consumption, the effects of the combustion system parameters of a diesel engine, such as injection pressure, injection nozzle hole diameter, swirl ratio, and EGR rate on exhaust emissions, combustion noise and fuel consumption are investigated and described in detail by analyzing rate of heat release, needle valve lift and injection pressure. Based on these results, reduction of exhaust emission and combustion noise and improvement of fuel consumption are described in the latter part of this paper. These results are shown as follows. The smaller nozzle hole diameter is effective for reducing smoke and PM, and by optimizing the injection timing and swirl ratio, NOx can also be reduced. In addition to the above, by applying EGR and higher injection pressure it is possible to improve the fuel consumption with the remaining low NOx and PM. It is effective to apply higher compression ratio and smaller injection nozzle hole diameter for reducing combustion noise with the remaining low exhaust emissions.