The performance of internal combustion engines should be improved depending on some technological requirements and rapid increase in the fuel expenses. On the other hand, the improvements in engine materials are forced by using alternative fuels and environmental requirements. Therefore, the performances of engine materials become increasingly important. Experimental research of insulated diesel engine incorporating thermal barrier coating (TBC) has produced controversial result. Some publications report that engine efficiency increases with insulation, while others argue that efficiency decreases. There are reports also presenting a mixed picture.This Paper presents comparative analysis of heat release in base line and insulated (Piston crown with plasma sprayed zirconia coating) diesel engine. The coating system affects the fuel consumption, the power and the combustion efficiency, pollution contents and the fatigue lifetime of engine components. Usually there are several beneficial influences by applying ceramic layers on the combustion chamber, including the piston, the cylinder head, the cylinder block, intake and exhaust valves by using a plasma thermal spray method. Several disadvantages such as producing nitrogen oxides also exist when a coating system is used. In this Paper, all effects, advantages and disadvantages of thermal barrier coatings are investigated based on experimental result. The explanation of the efficiency loss mechanism was also given. Experimental investigation is carried out under different load conditions on a 3 cylinder diesel engine with PZT loaded cyanate modified epoxy resin system of 0.5 mm thickness to the piston, cylinder head with valves and cylinder liner. The result showed reduced specific fuel consumption. Emissions of unburnt hydrocarbon, carbon monoxide are reduced whereas NOx is increased.