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The effects of blending ETBE to diesel fuel on the characteristics of low temperature diesel combustion and exhaust emissions were investigated in a naturally-aspirated DI diesel engine with large rates of cooled EGR. Low temperature smokeless diesel combustion in a wide EGR range was established with ETBE blended diesel fuel as mixture homogeneity is promoted with increased premixed duration due to decreases in ignitability as well as with improvement in fuel vaporization due to the lower boiling point of ETBE. Increasing the ETBE content in the fuel helps to suppress smoke emissions and maintain efficient smokeless operation when increasing EGR, however a too high ETBE content causes misfiring at larger rates of EGR. While the NOx emissions increase with increases in ETBE content at high intake oxygen concentrations, NOx almost completely disappears when reducing the intake oxygen content below 14 % with cooled EGR.