The small-displacement direct-injection (DI) diesel engine is a prime candidate for future transportation needs because of its high thermal efficiency combined with near term production feasibility. Ford Motor Company and FEV Engine Technology, Inc. are working together with the US Department of Energy to develop a small displacement DI diesel engine that meets the key challenges of emissions, NVH, and power density. The targets for the engine are to meet ULEV emission standards while maintaining a best fuel consumption of 200g/kW-hr. The NVH performance goal is transparency with state-of-the-art, four-cylinder gasoline vehicles.Advanced features are required to meet the ambitious targets for this engine. Small-bore combustion systems enable the downsizing of the engine required for high fuel economy with the NVH advantages a four- cylinder has over a three-cylinder engine. Initial single cylinder engine testing indicated that a 300cc per cylinder engine concept is capable of meeting the power and torque targets of the vehicle. The enhanced features of this engine concept include a four-valve combustion system, a variable geometry turbocharger with intercooling as well as a high pressure common rail fuel system and electric EGR. These features offer high charge density, the maximum flexibility for injection pressure control, and fast response transient control features necessary to achieve high BMEP and low fuel consumption as well as low emissions in a small-bore DI engine.This paper presents the major features of the design concept and combustion system. Benchmarking with state-of-the-art DI diesel engine technology allows a detailed assessment of the capabilities and development potential for this new engine concept.