The roll of the vehicle for the transportation of people and goods will become more important all over the world. The reciprocating engine, burning petroleum, will continue to be demanded in the future as the most practical powerplant to power the vehicle.The diesel engine, which has the highest thermal efficiency among engines will become more valuable, considering the increasing threat of the limited energy resources and global warming due to CO2 emission. Therefore, diesel engine technology must be one of the most important technological fields for the future.The current status of performance, fuel economy and exhaust emissions of vehicle diesel engines is summarized in this paper, and the possibility of further technological advancement is discussed. In this discussion, various technologies focusing on the simultaneous reduction of fuel consumption and exhaust emissions by combustion and cycle efficiency improvement are reviewed. Prototype direct injection passenger car diesel engines incorporating those technologies are built and tested, and achieved very low fuel consumption and exhaust emissions. The result of these studies shows the diesel engines high potential of further improvement in fuel economy and exhaust emissions in the future, meeting social demand of the world.