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This research investigates engine performance and the possibility of reducing exhaust emissions by using Dimethyl Ether (DME). There are high expectations for DME as a new alternative fuel for diesel engines for heavy-duty vehicles. In this experiment, a single cylinder direct-injection diesel engine with displacement of 1.05 liter and a compression ratio of 18:1 was used as a base engine. Common rail type DME fuel injection equipment for the single cylinder engine experiment was installed, and direct injection in the cylinder of DME was tried. Results indicated that high injection pressure, high swirl ratio, and supercharging using multi-hole injectors are effective for combustion promotion in the DME fueled diesel engine (DME engine). The output of the DME engine using supercharging with an intercooler and EGR was higher than that of a diesel engine. By increasing the EGR rate Nox emission was reduced to about 1/3 that of the diesel engine. Smoke was not completely emitted.