The cooled EGR system has been focused on as a method for knocking suppression in gasoline engines. In this paper, the effect of cooled EGR on knocking suppression that leads to lower fuel consumption is investigated in a turbo-charged gasoline engine.First, the cooled EGR effect is estimated by combustion simulation with a knock prediction model. It shows that the ignition timing at the knocking limit can be advanced by about 1 [deg. CA] per 1% of EGR ratio, combustion phasing (50% heat release timing) at the knocking limit can be advanced by about 0.5 [deg. CA] per 1% of EGR ratio, and the fuel consumption amount can be decreased by about 0.4% per 1% of EGR ratio.Second, the effect of cooled EGR is verified in an experimental approach. By adding inert gas (N2/CO2) as simulated EGR gas upstream of the intake pipe, the effect of EGR is investigated when EGR gas and fresh air are mixed homogeneously. As a result, the ignition timing at the knocking limit is advanced by 7 [deg. CA] and the combustion phasing at the knocking limit is advanced by 5 [deg. CA] when the EGR ratio is 8%, which proves the validity of the simulation result. Next, by introducing the actual EGR gas in two ways, low pressure EGR and high pressure EGR, the effect of EGR mixing conditions is investigated. The result shows that the effect on knocking suppression is nearly the same in all conditions, but the effect on fuel consumption differs because of the combustion speed difference. Furthermore, EGR drastically decreases the exhaust gas temperature. Therefore, under high engine speed condition, the maximum boost pressure, which is limited by the maximum allowable exhaust gas temperature, is improved at higher EGR ratios, so the maximum torque increases by 1.5% per 1% of EGR ratio.