This is the second of a series of papers on how exhaust gas recirculation (EGR) affects diesel engine combustion and emissions. It concentrates on the effects of carbon dioxide (CO2) which is a principal constituent of EGR.Results are presented from a number of tests during which the nitrogen or oxygen in the engine inlet air was progressively replaced by CO2 and/or inert gases, whilst the engine speed, fuelling rate, injection timing, inlet charge total mass rate and inlet charge temperature were kept constant.In one set of tests, some of the nitrogen in the inlet air was progressively replaced by a carefully controlled mixture of CO2 and argon. This ensured that the added gas mixture had equal specific heat capacity to that of the nitrogen being replaced. Thus, the effects of dissociated CO2 on combustion and emissions could be isolated and quantified (chemical effect).In another set of tests, some of the nitrogen in the inlet air was progressively replaced by a carefully controlled mixture of helium and nitrogen. This ensured that the mixture replacing the nitrogen in the air had a specific heat capacity equal to that of CO2. Thus the effects of the high heat absorbing capacity of CO2 on combustion and emissions could be isolated and quantified (thermal effect).In a final series of tests some of the oxygen in the inlet air was progressively replaced by CO2 in order to quantify the overall effects of CO2 on combustion and emissions and compare with the individual chemical, thermal, and dilution effects.It was found that CO2 dissociation had small but measurable effects on exhaust emissions. The high heat absorbing capacity of CO2 had only a small effect on exhaust emissions (including NOx); this finding challenges conventional wisdom as to the importance of the higher heat capacity of CO2 in suppressing NOx when EGR is added to the inlet air of diesel engines.