In recent years, paraffinic fuels have attracted attention because of their potential for reducing diesel exhaust emissions, mainly smoke or particulate matter emissions. One of the paraffinic fuels, a Fischer-Tropsch diesel fuel, was selected to demonstrate the lower exhaust emissions while improving fuel economy in this study. To examine the detailed effects of fuel specifications on diesel combustion and emissions, preliminarily tests for three Fischer-Tropsch fuels and a baseline diesel fuel were carried out with three diesel engines having different engine displacements. In addition, differences in combustion phenomena between Fischer-Tropsch fuels and the baseline diesel fuel were observed by means of a singlecylinder engine with optical access. From these findings, one of the tested engines was modified to improve both exhaust emissions and fuel consumption, simultaneously, dedicated to the use of neat Fischer-Tropsch fuels. The conversion efficiency of an oxides of nitrogen reduction catalyst has also been improved. The desirable properties of Fischer-Tropsch fuels for diesel combustion, namely high cetane number and absence of poly-aromatic hydrocarbon contents, have been fully utilized to enhance the conventional diesel combustion limits to show the possibility to achieve very low exhaust emissions with substantial improvement in fuel economy. The results of this study indicate not only the superior emission characteristics of the Fischer-Tropsch fuels, but also evidence that higher exhaust gas recirculation and lower excess air ratios will be a key concept of both engine and aftertreatment optimization for further fuel consumption improvement.