The demand for fuel-efficient, low-displacement engines for future passenger car applications led to investigations with small DI diesel engines in the advanced engineering department at Mercedes-Benz. Single-cylinder tests were carried out to compare a 2-valve concept with 241 cm3 displacement with a 422 cm3 4-valve design, both operated with a common rail injection system. Mean effective pressures at full load were about 10 % lower with the smaller displacement. With such engines a specific power of 40 kW/I and a specific torque of about 140 Nm/I should be possible. In the current stage of optimization, penalties in fuel economy could be reduced down to values below 3 %.The “4-cylinder DI diesel engine with 1 liter displacement” is an interesting alternative to small 3 cylinder concepts with higher displacement per cylinder. An introduction into series production will not only depend on the potential for further improvement in fuel economy of such small cylinder units. Other aspects, such as production cost and comfort will also play an important role.