This paper presents a computational study of the effects of fuel and thermal stratifications on homogenous charge compression ignition (HCCI) combustion process in a personal car sized internal combustion engine. Stratified HCCI conditions are generated using a negative valve overlap (NVO) technique. The aims of this study are to improve the understanding of the flow dynamics, the heat and mass transfer process and the onset of auto-ignition in stratified charges under different internal EGR rate and NVO conditions. The fuel is ethanol supplied through port-fuel injection; the fuel/air mixture is assumed to be homogenous before discharging to the cylinder. Large eddy simulation (LES) is used to resolve in detailed level the flow structures, and the mixing and heat transfer between the residual gas and fresh fuel/air mixtures in the intake and compression strokes. Multi-Zone model based on a detailed chemical kinetic mechanism is then used to simulate the onset of auto-ignition in the combustion stroke near TDC, based on the mixtures predicted in LES. It is found that for low and moderate EGR rates (low and moderate NVO) the onset of ignition is more sensitive to the temperature of the mixture than to the fuel concentration. For the high EGR rate and large NVO case, there is a preferred mixture and temperature at which the first ignition occurs. Under similar operating conditions the moderate NVO and EGR rate case is found to have the earliest ignition, whereas the longest combustion duration is found in the lowest EGR rate and the lowest NVO case.