For spark-ignition gasoline engines operating under the wide speed and load conditions required for light duty vehicles, ignition quality limits the ability to minimize fuel consumption and NOx emissions via dilution under light and part load conditions. In addition, during transients including tip-outs, high levels of dilution can occur for multiple combustion events before either the external exhaust gas can be adjusted and cleared from the intake or cam phasing can be adjusted for correct internal dilution. Further improvement and a thorough understanding of the impact of the ignition system on combustion near the dilution limit will enable reduced fuel consumption and robust transient operation. To determine and isolate the effects of multiple parameters, a variable output ignition system (VOIS) was developed and tested on a 3.5L turbocharged V6 homogeneous charge direct-injection gasoline engine with two spark plug gaps and three ignition settings. External exhaust gas recirculation (EGR) was used to explore combustion near dilution limits with various ignition system configurations. Tests were conducted under two engine operating conditions, a road load of 2.6 bar BMEP and engine speed of 1500 rev/min and a light load of 1.5 bar BMEP and engine speed of 1000 rev/min. At these two conditions, ignition tests were performed with various external EGR rates. The results show that the spark plug gap size is the dominant factor for the two engine conditions, and that the smaller gap size plug has a lower EGR tolerance than the larger gap size. Additionally the results show that increasing total duration via continuous or discontinuous discharges improves combustion stability and EGR tolerance. Finally ignition system requirements are summarized for dilute low load combustion in the context of the overall requirements for an ignition system in DI boosted engines.