Compared with petroleum fuel, liquefied petroleum gas (LPG) demonstrates advantages in low CO2 emission because of propane and butane, which are the main components of LPG, making H/C ratio higher. In addition, LPG is suitable for high efficient operation of a spark ignition (SI) engine due to its higher research octane number (RON). Because of these advantages, that is, diversity of energy source and reduction of CO2, in the past several years, LPG vehicles have widely used as the alternate to gasoline vehicles all over the world. Consequently, it is absolutely essential for the performance increase of LPG vehicles to comprehend the combustion characteristics of LPG and to obtain the guideline for engine design and calibration.In this study, an LPG-SI engine was built up by converting fuel supply system of an in-line 4-cylinder gasoline engine, which has 1997 cm3 displacement with MPI system, to LPG liquid fuel injection system . The combustion characteristics of LPG were also investigated by comparing with regular gasoline. In addition, for the purpose of achieving a good balance between improvement of efficiency and maintenance of engine torque and exhaust emissions, the expansion of EGR limit and the increase of compression ratio were tried by making the most of the revealed combustion characteristics of LPG. As for the expansion of EGR limit, experiments were conducted with LPG which contains propane of about 20% in mass as the fuel of LPG-SI engine and regular gasoline for comparison. As for the increase of compression ratio, in addition to aforementioned fuels, experiments were conducted with LPG which contains propane of about 100% in mass.In the results, the rate of heat release from experimental in-cylinder pressure data showed that the combustion rate of LPG was faster than that of gasoline, and this led to expansion of EGR limit by 3 to 5% under partial load condition. Therefore, it was able to achieve a good valance between improvement of efficiency and the reduction of NOx emission. Furthermore, the results showed that margin for knock occurrence of LPG was largely increased under the full load condition, because the antiknock quality of LPG was more excellent than that of regular gasoline. The increased margin for knock occurrence allowed increasing compression ratio from 10, which is a base engine specification, to 12 for LPG25P and 13 for LPG100P. This led to the achievement of a good valance between the improvement of efficiency under the partial load condition and the maintenance of torque performance under the full load condition.