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Diesel engines are the most commonly used power plant of freight and public transportations in the world. Also, the newly developed injection system, Common Rail system, increases the demands for both light and heavy duty diesel vehicles. On the other hand, stringent emission regulations are being proposed with growing concern on NOx and PM emissions from diesel engines. Future emission regulations require advanced emission control technologies, such as EGR and SCR. Exhaust gas recirculation (EGR) is a commonly used technique to reduce NOx emission. In this paper, a model-based investigation was conducted to compare the effect of high pressure loop (HPL) EGR and low pressure loop (LPL) EGR system on NOx level and BSFC of a heavy-duty diesel engine. A WAVE model was created to simulate EURO 3 engine and each component of the engine was modeled using CATIA and WaveMesher.