Life cycle analysis enables to investigate environmental performance of fuel ethanol used in an E10 fueled compact passenger vehicle. Ethanol is derived from corn grain via dry milling. This type of analysis is an important component for identifying practices that will help to ensure that a renewable fuel, such as ethanol, may be produced in a sustainable manner. Based on data from eight counties in seven Corn Belt states as corn farming sites, we show ethanol derived from corn grain as E10 fuel would reduce nonrenewable energy and greenhouse gas emissions, but would increase acidification, eutrophication and photochemical smog, compared to using gasoline as liquid fuel. The ethanol fuel systems considered in this study offer economic benefits, namely more money returned to society than the investment for producing ethanol. The environmental performance of ethanol fuel system varies significantly with corn farming sites because of different crop management practices, soil properties, and climatic conditions. The dominant factor determining most environmental impacts considered here (i.e., greenhouse gas emissions, acidification, eutrophication, and photochemical smog formation) is soil related nitrogen losses (e.g., N2O, NOx, and NO3-). The sources of soil nitrogen include nitrogen fertilizer, crop residues, and air deposition. Nitrogen fertilizer is probably the primary source. Simulations using an agro-ecosystem model predict that planting winter cover crops would reduce soil nitrogen losses and increase soil organic carbon levels, thereby greatly improving the environmental performance of the ethanol fuel system. (C) 2007 Elsevier Ltd. All rights reserved.