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The aim of this study is to find strategies for fully utilizing the advantage of diesel-ethanol blend fuel in recent diesel engines. For this purpose, experiments were performed using a single-cylinder direct injection diesel engine equipped with a high-pressure common rail injection and a cold EGR system. The results indicate that significant PM reduction at high engine loads can be achieved using 15% ethanol-diesel blend fuel. Increasing injection pressure promotes PM reduction. However, poor ignitability of ethanol blended fuel results in higher rate of pressure rise at high engine loads and unstable and incomplete combustion at lower engine loads. Using pilot injection with proper amount and timing solves above problems. NOx increase due to the high injection pressure can be controlled employing cold EGR. Weak sooting tendency of ethanol-blend fuel enables to use high EGR rates for significant NOx reduction.