Butanol, which is a renewable biofuel, has been regarded as a promising alternative fuel for internal combustion engines. When blended with diesel and applied to pilot ignited natural gas engines, butanol has the capability to achieve lower emissions without sacrifice on thermal efficiency. However, high blend ratio of butanol is limited by its longer ignition delay caused by the higher latent heat and higher octane number, which restricts the improvement of emission characteristics. In this paper, the potential of increasing butanol blend ratio by adding hot exhaust gas recirculation (EGR) is investigated. 3D CFD model based on a detailed kinetic mechanism was built and validated by experimental results of natural gas engine ignited by diesel/butanol blends. The effects of hot EGR is then revealed by the simulation results of the combustion process, heat release traces and also the emissions under different diesel/butanol blend ratios. To get a better fundamental understanding of the EGR effects, the explanations for the effects induced by hot EGR is aided by 0D simulations. The results indicate that the ignitable range of n-butanol blend ratio can be extended from 40% to 60% by the adoption of hot EGR. Besides, the thermal efficiency could be improved by adding appropriate fraction of hot EGR at n-butanol ratios higher than 30%. Generally, optimized thermal efficiency and emission characteristics of NOx and CO can be achieved with adding hot EGR by 5% and 10%. It is also find that improvements in PAH emissions can be obtained by adding hot EGR at n-butanol blend ratios smaller than 30% and PAHs with more than two rings could be reduced by adding n-butanol.