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A CAE-based optimization method is developed for Lube Oil Consumption (LOC) analysis of the piston-ring system. With accurate thermodynamic boundary conditions from 1D engine combustion simulation, piston motion, dynamics of piston ring, and characteristics of oil consumption are simulated using AVL Piston&Ring. The model is validated by comparing with available test data. Good match is achieved. The model is then applied to a diesel engine. The root cause of excessive LOC of the engine has been identified through CAE. The improved understanding has been applied to optimize the piston and piston ring. Engine dyno test, 1200-hour engine durability test, and 45000-kilometer vehicle test have been conducted to validate the optimized design. The experiment results are in good agreement with CAE predictions, and the oil consumption has been improved over the original design.