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Hydrous ethanol is pointed out as one of the major alternative fuel for internal combustion engines, because it is environmental friendly (almost zero CO2 emission) and has excellent combustion properties. Recent studies have shown that ethanol-water fuel blends with higher water content (so-called wet ethanol) can reduce the overall costs of ethanol production. The use of wet ethanol results in lower nitrogen oxides emissions at the cost of reduced lower heating value per mass of fuel blend, which may result in less thermal efficiency. On the other hand, the increase in water content improves knock resistance. Thus, this study aims to investigate the effects of mechanical compression ratio variation on a spark ignition engine using ethanol-water fuel blends containing 4, 10, 20 and 30% v/v of water in ethanol. The research was carried out in a SI single cylinder engine, port fuel injected, 0.668 dm3 with the compression ratio modified by spacer rings.