In this work, optimization of various parameters, such as injection timing, compression ratio (CR) and amount of ultra-cooled exhaust gas recirculation (EGR) has been done for a variable compression ratio engine. The CR can be adjusted dynamically by changing the clearance volume through a tilting cylinder block arrangement. An EGR system, suitable for achieving ultra-cooled as well as treated EGR and large range of flow rates, has been implemented. Taguchi analysis was employed to carry out minimum number of experimental runs and still get the essence of large number of test cases. Effect of these parameters on engine performance and exhaust emissions has also been studied with the help of signal to noise (SN) ratio analysis. Flatter and wider HRR traces were observed in previous work of Brijesh et al., indicating a low temperature combustion (LTC) mode for the runs having optimized input parameters. Simultaneous reduction of NOx and PM were achieved for runs with optimized parameters in the first stage, but HC and CO emissions were slightly higher compared to the base run.During the current study, second stage of optimization has been carried out for further reduction in emissions with improved performance. Combination of input parameters selected for run 4 of second stage optimization, i.e., -15 CAD aTDC injection timing, 18 CR, 220 bar injection pressure and 25% ultra-cooled EGR seems to be the optimum set of operating parameters for this engine. LTC mode has been achieved with these optimum operating parameters. Brake thermal efficiency was also improved by around 12% compared to that with the base operating parameters. The optimization method indicates that LTC achieved by the combination of retarded injection timings and moderate rate of ultra-cooled EGR, also provides better efficiency even with low injection pressure (~ 220 bar). Increase in HC and CO emissions had been reported as a major issue with LTC in various literatures. But in the present work, reduction in CO and only a slight increase in HC emissions were observed even with LTC mode of combustion. It was mainly possible due to moderate use of ultra-cooled EGR. Compared to conventional EGR, lower amounts of ultra-cooled EGR were sufficient to achieve similar reduction in NOx and PM with reduced HC, CO. Use of ultra-cooled EGR is beneficial in achieving LTC even at higher load conditions. Additionally, decrease in pressure rise rate (PRR) and hence engine noise was also observed.