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For meeting 21st-century exhaust emission standards for HD diesel engines, new methods are necessary for reducing NOx and PM emissions without increasing fuel consumption. The stratified diesel fuel-water-diesel fuel (DWD) injection in combination with exhaust gas recirculation (EGR) is as a means for NOx and PM reduction without any negative effect on fuel economy. The investigation was performed on a charged HD single-cylinder direct-injection diesel engine with a modern low-swirl combustion system, 4-valve technology and high pressure injection. The application of DWD injection combined with EGR resulted in a 60 percent lower NOx emission at full load and a 75 percent reduced NOx emission at part load when compared with present day (EURO II) technology. This was achieved without any fuel economy penalty, but with an additional PM emission reduction.