With the introduction of CO2 emissions legislation in Europe and many countries, there has been extensive research on developing high efficiency gasoline engines by means of the downsizing technology. Under this approach the engine operation is shifted towards higher load regions where pumping and friction losses have a reduced effect, so improved efficiency is achieved with smaller displacement engines. However, to ensure the same full load performance of larger engines the charge density needs to be increased, which raises concerns about abnormal combustion and excessive in-cylinder pressure. In order to overcome these drawbacks a four-valve direct injection gasoline engine was modified to operate in the two-stroke cycle. Hence, the same torque achieved in an equivalent four-stroke engine could be obtained with one half of the mean effective pressure. A wet sump was employed to avoid the inherent lubrication and durability issues of conventional two-stroke engines, and the scavenging process was ensured via external boosting. The adoption of direct fuel injection removed the problem of fuel short-circuiting present in mixture scavenged engines. Several loads were tested at 800 rpm and 1600 rpm and the overall engine performance was presented. Gaseous and smoke emissions were measured and examined, as well as an analysis of the spark ignition combustion process. The results demonstrated that very high torque at low engine speeds could be obtained at relatively low in-cylinder pressures and reasonable fuel consumption results.