The proposed paper deals with the development process and initial measurement results of an opposed-piston combustion engine for application in a Free-Piston Linear Generator (FPLG). The FPLG, which is being developed at the German Aerospace Center (DLR), is an innovative internal combustion engine for a fuel based electrical power supply. With its arrangement, the pistons freely oscillate between the compression chamber of the combustion unit and a gas spring with no mechanical coupling like a crank shaft. Linear alternators convert the kinetic energy of the moving pistons into electric energy. The virtual development of the novel combustion system is divided into two stages: On the one hand, the combustion system including e.g. a cylinder liner, pistons, cooling and lubrication concepts has to be developed. On the other hand, 3D-CFD-simulations are used in the early stage within the virtual development process toward the optimization of the geometry of the scavenging ports and ducts, the gas exchange, injection and ignition. With the high variability of the free piston concept, a strategy for a dual combustion mode operation with spark ignition and homogeneous charge compression ignition (HCCI) is developed. The new engine is constructed on and implemented at a hydraulic free-piston test bench at DLR which controls the piston movements by two hydraulic actuators. In this stage, the power is not converted by linear generators yet. First measurement results show the engine behavior with dual spark ignition and two opposed injectors.