From a view point of reducing exhaust emission level on a small utility 4-stroke spark-ignition engine, this paper describes the exhaust emission materials analysis and the affect against California Air Resources Board (CARB) specified testing mode on a new prototype while applying very lean mixture burning. The combustion chamber shape and the intake air passage of a production model (Displacement 286 cc, 4-stroke, air cooled, over head valve (OHV), single cylinder) was modified and optimized on the prototype to achieve a stable run up to a lean air-fuel ratio of 20 : 1. When the air-fuel ratio was changed, the highest density of NOx was a little higher than 3,000ppm at an air-fuel ratio of 16 : 1 and the lowest was about 300 ppm at an air-fuel ratio of 19 : 1. The emission level of THC was a little higher than 2,000ppm at an air-fuel ratio of 12 : 1 and less than 1,000 ppm at an air-fuel ratio of 15 : 1 and higher. This indicates that lean mixture burning is very effective in reducing exhaust emission levels. To evaluate the effect on exhaust emission reduction, the engine was tested in an air-fuel ratio range of 12 : 1 to 20 : 1 under CARB regulations. As compared to the 1995 non-hand-held category CARB regulation of CO 350 g/hp-hr and THC+NOx 10 g/hp-hr, this model brought only 30% of the CO and 75% of the THC+NOx regulation values. Moreover, when exhaust gas recirculation (EGR) was applied, the model showed 6% and 60% of the CO and THC+NOx values specified in the regulations, respectively.