The concept of D-EGR (Dedicated EGR) used high rate of EGR and fuel reformation to improve engine thermal efficiency, entire exhaust gas which supplied from a single cylinder was recirculated to the intake system and then entered into all cylinders to improve combustion. In this study, the D-EGR system was performed on a 1.5L PFI 4-cylinder gasoline engine, compared to the baseline engine, the reduction of fuel consumption was about 20~30 g/kWh in the entire D-EGR engine operating range, the minimum fuel consumption was reduced from 253.7 to 224.3 g/kWh, and the corresponding maximum brake thermal efficiency was improved from 32.6 to 36.8%. The D-lambda (lambda of dedicated cylinder) was considered as the most significant factor to influence the fuel economy and combustion stability, the suitable range of D-lambda was around 0.69~0.82 to gain better engine performance under the whole operating points of this experiment. The effect of D-lambda was investigated experimentally by thermodynamic analysis at several typical operating points, the released heat and exergy distribution of in-cylinder combustion were calculated by first and second law of thermodynamics, and the thermal equilibrium was discussed through qualitative and quantitative aspects, respectively. In addition, the emissionss concentration of carbon monoxide, hydrocarbon and hydrogen were compared under various D-lambda, then the parameter of fuel reformation degree was defined to investigate the relationships among D-lambda, fuel reformation and engine performance.