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There have been strong demands recently for reductions in the fuel consumption and exhaust emissions of diesel engines from the standpoints of conserving energy and curbing global warming. A great deal of research is being done on new emission control technologies using direct-injection (DI) diesel engines that provide high thermal efficiency. This work includes dramatic improvements in the combustion process. The authors have developed a new combustion concept called Modulated Kinetics (MK), which reduces smoke and NOx levels simultaneously by reconciling low-temperature combustion with pre-mixed combustion [1, 2]. At present, research is under way on the second generation of MK combustion with the aim of improving emission performance further and achieving higher thermal efficiency [3]. Reducing heat rejection in the combustion chamber is effective in improving the thermal efficiency of DI diesel engines as well as that of MK combustion.