In this study, the effect of using higher research octane rating fuel Liquefied Petroleum Gas (LPG) in respect of gasoline in the spark ignition engine on the performance and exhaust emission was experimentally studied. For this purpose, the tilting block technique of varying the compression ratio from 8 to 10 of the engine has been implemented and attention has been paid towards the variation of performance and combustion parameters with LPG fuel. Most undesirable emissions are exhausted by the spark ignition (SI) engines in which the primary pollutants from the engine (such as NOx) which when mixed in the atmosphere react with ozone and create the secondary pollutant that are more harmful to human health. Looking at this fact, while optimizing the compression ratio, the emission reduction technique like intake charge dilution with exhaust gas from the engine has been studied. This intake charge dilution method is called Exhaust Gas Recirculation (EGR) Rate cooled to atmospheric temperature and untreated being varied from lower 10% to very heavy 40% EGR Rate. The efficiency of the engine found to be decreased with increase of EGR and decrease of CR by 7-18%. The cylinder peak pressure showing maximum peak pressure when higher octane LPG fuel is used at maximum CR 10. NOx formation strongly depends on combustion temperature which reduces from 33-46% with EGR and oxygen concentration in mixture, gets reduced and helps to reduce the combustion temperature. Ultimately it helps to the atmosphere by NOX decrement. But the higher peak cylinder pressure, net heat release could not been converted to increase in power due to losses in cooling and exhaust.