This work presents an evaluation of one liter capacity, 4 cylinder engine operating with ‘Exhaust Gas Recirculation’ (EGR) at two compression ratios, 8.9:1 and 9.6:1. The compression ratio is increased, geometrically, within tolerable limits. This is achieved by a reduction in volume of the combustion chamber in order to bring the overall performance of the engine up to the results achieved before the engine was using EGR. The results indicate that the gain in efficiency obtained through increased compression ratios is maintained even with EGR. Moreover, after a certain percentage of the recirculation, the nitrogen oxide (NOX) and carbon monoxide (CO2) emissions are lower than the original engine. Depending on the engine speed, however, the emission of unburned hydrocarbons (HC) are higher than the original engine, and depending on the percentage of EGR, there is a slight loss of torque and power compared to the original.