Controlled Auto Ignition (CAI), also known as Homogeneous Charge Compression Ignition (HCCI), is one of the most promising combustion technologies to reduce the fuel consumption and NOx emissions. Most research on CAI/HCCI combustion operations have been carried out in 4-stroke gasoline engines, despite it was originally employed to improve the part-load combustion and emission in the two-stroke gasoline engine. However, conventional ported two-stroke engines suffer from durability and high emissions. In order to take advantage of the high power density of the two-stroke cycle operation and avoid the difficulties of the ported engine, systematic research and development works have been carried out on the two-stroke cycle operation in a 4-valves gasoline engine. CAI combustion was achieved over a large range of operating conditions when the relative air/fuel ratio (lambda) was kept at one as measured by an exhaust lambda sensor. Because of the presence of air short-circuiting in the two-stroke cycle operation, lean boost CAI combustion was implemented from 800rpm to 3000rpm and an IMEP range from 1.1bar to 7.8bar, and significant improvements in emissions and combustion efficiencies were demonstrated. To further extend the CAI operational range, ethanol-gasoline blends were tested during the two-stroke lean boost operation. The results show that CAI high load knocking limit is extended because of the charge cooling effect and slower burning rate of ethanol. In addition, the combustion process, emissions and efficiencies between gasoline and E85 are studied and presented.