Ethanol with high levels of hydration is a low cost fuel that has offers the potential to replace fossil fuels and lower atmospheric CO2 emissions. However, it can be of difficult ignition depending on the hydration levels. Combustion modes like HCCI have shown to be very tolerant to the water content in the fuel due to their non-flame propagating nature. Moreover, HCCI tends to increase engine efficiency while lowering emissions levels. This paper demonstrates the operation of a 3-cylinder generator engine in which one of the cylinders acts as a dedicated EGR producer for a dedicated ethanol cylinder operating with HCCI of wet ethanol. When the diesel cylinder is under low load, due to the excess air, it produces low combustion gases and becomes almost solely an air heater, Heat is then directly recycled back to the ethanol cylinder intake to promote autoignition of wet ethanol. Stable operation in part load operation was achieved with IMEP near 5 bar under different combinations of lambda, EGR rates and EGR composition. The operating parameters that are best for HCCI operation were defined. A complete heat release and emissions analysis was performed and results show the potential of this concept.