The significant fuel-economy gain that may be achieved from the application of ceramic materials to the piston engine technology requires practical and reliable exhaust heat recovery means. Such a means has so far eluded the engine technology community.The “add-on” bottoming cycles to the traditional piston engines based on Otto cycle and Diesel cycle are totally impractical. By contrast, steam injection has been effectively applied to gas turbine (electric generator) systems with significant increase in power output and thermal efficiency. The steam-injected gas turbine has been increasingly adopted in power production, and can be regarded as a mature technology. The question then arises as to whether steam injection can be used for piston-type engines in transportation.Gas generator engines-which have been investigated as experimental engines for many years-may be one of the piston-type engines ideally suited for practical heat recovery. The traditional gas generator engine, however, is inferior in performance to the common piston engines. A new cycle principle for gas generator engines was proposed by Wang and Jeng (1992). In this paper, a zero-dimensional computer simulation is used to demonstrate that the intermittent-combustion gas generator engine based on the proposed intercooling-supercharging cycle principle can match the performance of the best of diesel engines, equal in thermal efficiency, and greatly superior in specific power output.The Intercooled-supercharged gas generator engine is, therefore, an attractive candidate for the future adaptation of injected-steam. The resulting gas generator engine may be expected to be exceptional in both specific power output and thermal efficiency.