The growing usage of Unmanned Aerial Vehicles (UAVs) for aerial surveillance and reconnaissance in military applications calls for lightweight, reliable powerplants that burn heavy distillate fuels. While mass-produced engines exist that provide adequate power-to-weight ratio in the low power class needed for UAVs, they all use a spark-ignited combustion system that requires high octane fuels. Southwest Research Institute (SwRI) has embarked upon an internal research effort to design and demonstrate an engine that will meet the requirements of high power density, power output compatible with small unmanned aircraft, heavy-fuel combustion, reliable, durable construction, and producible design. This effort has culminated in the successful construction and operation of a demonstrator engine. The engine characteristics are suitable for other applications that require compact heavy fuel powerplants, including hybrid vehicles and portable power equipmentThe demonstrator engine is rated at 22.4 kW (30 hp), and weighs 18.8 kg (41.5 lbs). Weight reductions for production will result in a final weight of about 15.9 kg (35 lbs). It uses a prechamber combustion system, with conventional off-the-shelf fuel injection components. It is a two-cycle air-cooled engine, with a displacement of 523 cc (16.4 in3) in two horizontally-opposed power cylinders. Unique features include separate pistons and cylinders driving the scavenging air, unit castings of the power and compressor cylinders, and reed valves controlling the transfer ports. Discussed in this paper are the design approach, the trade studies, and the design analysis performed in designing a prototype engine, as well as the advanced methods of prototyping, and the results of prototype demonstration testing.