Conventional cylinder deactivation has been improving internal combustion efficiency for decades. It provides benefits for any internal combustion engine, particularly engines with high number of cylinders. The level of engine displacement reduction depends on the number of cylinders that may be deactivated during operation. This limits the potential benefit. Theoretically, maximum benefit of cylinder deactivation would require assignment of specific displacement reduction to each engine operating point. Dynamic cylinder deactivation is a new approach, which does not continuously deactivate cylinders, but deactivates selected engine cycles. This allows to dynamically reduce engine displacement and to assign optimum displacement reduction to each operating point. The paper deals with the one-dimensional thermodynamic simulation of the dynamic cylinder deactivation applied to a small displacement four-cylinder gasoline engine, points out crucial attributes of this new approach and compares it with baseline engine layouts and with the conventional cylinder deactivation as well. The research concludes that the dynamic cylinder deactivation improves the fuel consumption for engines loads BMEP < 5 bar. Deactivation strategy with the lowest trapped mass value in the deactivated cycle shows the most benefit.