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Extensive experiments were conducted on a low emission DI diesel engine by using Dimethyl Carbonate (DMC) as an oxygenate fuel additive. The results indicated that smoke reduced almost linearly with fuel oxygen content. Accompanying noticeable reductions of HC and CO were attained, while a small increase in NOx was encountered. The effective reduction in smoke with DMC was maintained with intake charge CO2, which led to low NOx and smoke emissions by the combined use of oxygenated fuel and exhaust gas recirculation (EGR). Further experiments were conducted on an optically accessible combustion bomb and a thermal cracking set-up to study the mechanisms of DMC addition on smoke reduction.