Internal combustion engines are operated under conditions of high exhaust gas recirculation (EGR) to reduce NOx emissions and promote enhanced combustion modes such as HCCI. However, high EGR under certain conditions also promotes nonlinear feedback between cycles, leading to the development of combustion instabilities and cyclic variability. We employ a two-zone phenomenological combustion model to simulate the onset of combustion instabilities under highly dilute conditions and to illustrate the impact of these instabilities on emissions and fuel efficiency. The two-zone in-cylinder combustion model is coupled to a WAVE engine-simulation code through a Simulink interface, allowing rapid simulation of several hundred successive engine cycles with many external engine parametric effects included. We demonstrate how this hybrid model can be used to study strategies for adaptive feedback control to reduce cyclic combustion instabilities and, thus, preserve fuel efficiency and reduce emissions.