A system is described for onboard hydrogen generation in an internal combustion engine. The hydrogen is produced from methanol reacting with steam in recirculated exhaust gas over a Ni-catalyst. The energy for the reaction is supplied by the exhaust waste heat. The hydrogen is used to extend the lean limit of the gasoline in order to achieve higher efficiency and lower pollutant emissions.A theoretical study of the required amount of recirculated exhaust gas has been made and the energy efficiency of the reactor has been calculated. The produced and the required amount of hydrogen have also been calculated.A stationary test engine using the system is presented.The results show a potential for very low pollutant emissions with an increased energy efficiency compared to that of a conventional engine.