In this study, the effects of reducing the compression ratio on the performance and exhaust emissions in a low heat rejection (LHR) indirect injection Diesel engine have been experimentally compared to those obtained from a standard Diesel engine (SDE) with fixed compression ratio. Reducing the compression ratio in a SDE without making any modification in the combustion chamber geometry and improvements in fuel properties cause the ignition delay time to be unduly long, and consequently, an unacceptable pressure rise is experienced. By means of high temperature increases in the combustion chamber of the LHR Diesel engine, the compression ratio was lowered from 18.20 to 16.10 in 0.7 intervals. Satisfactory performance was obtained at compression ratios of 17.50 and 16.80 in the LHR engine. In comparison to the SDE, at these compression ratios, the specific fuel consumption and NOx emissions are, respectively, decreased about 2.9% and 15%.