Modern medium duty diesel engines are all developed with engine brake as a standard feature. The main purpose of the engine brake in an automobile is to deliver high vehicle retardation, engine safety and longer foundation brake life. It allows the driver to possess complete control of the vehicle while driving downhill without the need for frequent usage of foundation brakes. This intern prevents the engine revs from exceeding the safe limit thereby protecting the engine. It also help reduce the fuel consumption by avoiding unnecessary braking and thereby necessitating to accelerate again.Typically the braking power in a diesel engine is generated by closing the exhaust system partially or completely. This would increase the back pressure in the exhaust circuit and thereby increase the piston work of the engine. This negative work is used for vehicle braking. This system is called as “Exhaust brake”. The braking power developed is typically a function of the engine size and the engine speed. The braking power can be further enhanced by using the exhaust valves as throttles. This is achieved by various patented hydraulic or electrical actuation mechanisms which would keep one of the exhaust valves in open condition during the intake, compression, expansion strokes until normal exhaust stroke takes place.As a first step of development of this engine brake system for Ashok Leyland's New generation medium duty diesel engine a 1D thermodynamic simulation was performed using AVL Boost 5.1 software to predict the braking performance. This thermodynamic simulator allowed iterative investigation all the design parameters at a virtual level without the cost and time of prototyping and testing. Finally the optimized design parameters were prototyped and tested experimentally and the results are compared.