Experimental work at the Royal Naval Engineering College and the University of Exeter has demonstrated that a diesel engine operating on recycled combustion products has sufficient potential to warrant consideration for Autonomous Underwater Vehicle (AUV) applications. Results are given for a Perkins T4.236 diesel engine operating on O-2/CO2 mixtures. The effect of CO2 concentration and inlet-gas preheat has been studied in relation to the torque, power output, fuel consumption, exhaust-gas temperature, cylinder pressure and combustion characteristics. The engine operates satisfactorily on a 30% O-2/70% CO2 mixture but, in comparison with the naturally aspirated engine, a degradation in the performance is observed amounting to a reduction of 20-23% in brake power and, more seriously, an increase of 23-28% in brake specific fuel consumption under maximum-torque conditions.