Complexity of the modern diesel engine has increased to meet the stringent future emission regulations especially for NO (nitrogen oxide) and PM (particulate matter). Air management system including exhaust gas recirculation (EGR), turbocharger and variable valve actuation (VVA) must be optimized of its design and control algorithm for combustion improvement coupled with precision control of fuel injection. As a matter of course, the optimization of aftertreatment system is extremely important for the exhaust emissions reduction. In addition, improvement of fuel consumption is very important from the standpoint of response to energy security and reduction of CO₂ (carbon dioxide) emission as the greenhouse gas. However an enormous amount of energy will be required to develop such kind of the complex engine system by conventional actual testing. Therefore, the total engine simulation system (TESS) with quasi-real-time processing and relatively high precision model for prediction of fuel consumption and exhaust emissions was developed in this study. The TESS consists of the zero-dimensional gas flow model and the aftertreatment model written by Simulink code. In addition, the zero-dimensional multi-zone diesel combustion model, HIDECS (Hiroshima University diesel engine combustion simulation) which was developed by Hiroyasu et al., is embedded in the TESS. Since modeling logic of the HIDECS is based on the phenomenalism, prediction accuracy and calculation speed are well balanced. The premixed compression ignition (PCI) combustion will be a key technology for simultaneous reduction of exhaust emissions and fuel consumption. However, there are some problems to predict the PCI combustion on the original HIDECS. Therefore, modification of the HIDECS model to predict the PCI combustion was also conducted in this study. Modified model uses pseudo method for consideration of mixing process that is strongly governed by oxygen concentration. Additionally, equation about ignition delay was also modified to fit the EGR rate changing. In this result, the modified HIDECS can predict exhaust emissions and fuel consumption on the PCI combustion. Finally, performance estimation of the most advanced diesel engine with multi-stage boosting, massive GR and ultra high pressure injection was conducted by using the TESS including the modified HIDECS model. Experiment of single-cylinder engine which has the VVA system was also conducted to make the TESS effectiveness clear and to get knowledge for further improvement of fuel consumption. In this result, effectiveness of the TESS for system investigation of the future diesel engine is clear. In addition, technological direction of fuel consumption improvement is indicated by the TESS and experimental result. This project was conducted as a part of the comprehensive technological development of innovative, next-generation, low-pollution vehicles program in the New Energy and Industrial Technology Development Organization (NEDO) of Japan.