This paper deals with the analysis of heat release characteristics of an insulated turbocharged, six cylinder, DI contemporary diesel engine. The engine is fully insulated with thin thermal barrier coatings. Effect of insulation on the heat release was experimentally verified. Tests were carried over a range of engine speeds at 100%, 93%, 75% and 50% of rated torque. Fuel injection system was instrumented to obtain injection pressure characteristics. The study shows that rate of heat release, particularly in the major portion of the combustion, is higher for the insulated engine. Improvement in heat release and performance are primarily attributed to reduction in heat transfer loss due to the thin thermal barrier coating. Injection pressure at the rated speed and torque was found to be 138 MPa and there was no degradation of combustion process in the insulated engine. Improvements in BSFC at 93% load are 3.25% and 6% at 1600 and 2600 RPM, respectively. Improvement in BSFC reduced with the decrease in load. Factors that may effect combustion in an insulated engine are also reviewed in this paper.