This paper investigates the combined effect of EGR and emulsified fuels on engine performance. The influence of intake air temperature (25∼86°C) on engine performance was examined prior to uncooled EGR experiments. Compared with gas oil, emulsified fuel gave simultaneous improvements in NOx concentration, smoke density, and specific fuel consumption (BSFC) over the tested range. The effect of EGR on engine performance were investigated with various water to fuel ratios at two load conditions (BMEP=0.52MPa and 0.26MPa). It was confirmed that at 11% EGR with the emulsified fuel at the rated output resulted in a significant reduction in NOx concentration without worsening smoke density and BSFC.