To comply with the environmental demands for CO2 reduction without compromising driving performance, a new 1.0L I3 turbocharged gasoline direct injection engine has been developed. This engine is the smallest product in the new Honda VTEC TURBO engine series, and it is intended to be used in small to medium-sized passenger car category vehicles, enhancing both fuel economy through downsizing, downspeeding and state-of-the-art friction reduction technologies, and also driving performance through turbocharging with an electrically controlled waste gate. This 1.0L I3 engine has many features in common with other VTEC TURBO engines such as the 1.5L I4 engine and 2.0L I4 engine, which have already been introduced on the market. Some of these are the rapid combustion concept realized by high tumble intake port design and the optimized combustion chamber configuration combined with a side mounted multi-holes direct injection system. Also the VTEC (Variable valve timing and lift electronic control system) has been used in the intake valve system in this 1.0L I3 engine in order to realize an Atkinson cycle with early intake valve close timing. This helps to reduce fuel consumption in low valve lift mode. Investigation results also showed that side mounted direct injection has potential that is comparable to that of central mounted direct injection in terms of mixture homogeneity and combustion chamber wall wetting, and no disadvantage in combustion performance was observed. In addition, friction reduction technologies such as an electrically controlled variable oil pump, timing belts in the oil system for both the valve train and oil pump drive, a narrow crankshaft made of nitrided high-strength steel were used as well to achieve the lowest fuel consumption characteristics in this class. This article reports on the key technologies contained in this 1.0L I3 engine and explains how the engine’s characteristics are realized.