A new 1.2L inline 3-cylinder supercharged gasoline engine was developed to improve fuel efficiency and to meet EURO 5 emission regulations. The engine was designed with a high compression ratio, heavy exhaust gas recirculation (EGR), and a long stroke to improve fuel efficiency. The Miller cycle and a direct fuel injection system were applied to this engine in order to mitigate the occurrence of knock due to the high compression ratio. In addition, a supercharging system was adopted to compensate for the decline in charging efficiency due to the Miller cycle. The design of a direct injection gasoline engine involves a lot of problems such as reduction of oil dilution, stabilization of combustion at first idle retarded, improvement of air-fuel mixing homogeneity, and strengthening of the gas flow. It is hard to resolve these problems independently due to their complexities and difficult nature. Reducing wall wetting by the fuel spray can improve oil dilution in a small engine. Mixture homogeneity is an important factor for the knock control. Strong turbulence intensity helps to avoid unstable combustion under heavy EGR. Stratified combustion is an effective measure against cold-start hydrocarbon emissions. A suitably stratified mixture obtained by optimizing the fuel spray geometry and piston cavity shape is necessary for combustion stability.The progress seen in computer performance in recent years and rapid advances in 3D simulation tools now facilitate the application of such tools to internal combustion engines. Today, simulation tools are necessary and indispensable techniques in the design and development of engines, such as for analyzing in-cylinder flow fields and mixture distribution. This paper presents the methodologies applied to the combustion design based on the use of 3D simulation tools instead of an experimental trial-and-error approach. The fuel spray geometry was designed. That made it possible to satisfy simultaneously the thresholds set for the fuel mass sticking to the bore wall and mixture homogeneity. The piston cavity geometry was designed. It was predicted that the equivalence ratio around the spark plug at the time of ignition was in an ignitable range and that combustion stability could be assured. The intake geometry port was designed. Strong gas flow serves to disperse the fuel spray so that the threshold for mixture homogeneity is satisfied, and strong turbulence intensity also achieves the target set for knock resistance. The geometry of the flow control device was designed. The ratio of opening area of the swirl control valve was designed by closely examining the trade-off between the pumping loss due to this flow control device and the pumping loss attributable to the application of EGR. Effective use of 3D simulation tools led to successful optimization of the geometries of a flow control device, intake port, piston and fuel spray to meet the various requirements mentioned above. Consequently, the new supercharged gasoline engine achieves improved fuel economy in experimental and balances the trade-offs with other performance attributes.