The crankcase-scavenged two-stroke-cycle engine is preferred in cases where low weight and high power output are paramount requirements. These qualities are most important in small pilotless aircraft. It was found that the main problem in the use of two-stroke cycle engines for this purpose, is a sharp decrease in the engine power with the increase in altitude. This is attributed not only to the low density of the ambient air, but also to the deterioration of the efficiency of the gas exchange process.In order to improve the engine performance at high altitude, it is proposed here to employ a stepped-piston engine. The engine is constructed of a stepped piston and a single stepped cylinder thus forming three compartments; a power, a compression and a crankcase compartment. In this arrangement, the fresh charge is compressed in the compression compartment before it enters the crankcase compartment.A computer program, the MICE (Modeling Internal Combustion Engines) program, was modified to consider this type of engine, and used to study the effect of various parameters on the engine performance. A geometry optimization for maximal performance was performed.It is shown that a significant improvement in the engine performance map at high altitudes can be obtained with the stepped-piston engine. The optimized engine can function well at 5,000 ft (∼1,500 m) higher than the conventional engine, while its specific fuel consumption at low altitudes is well below the conventional one, thus increasing the aircraft mission range.