Downsized spark ignition engines have the benefit of high thermal efficiency; however, severe engine knock is a challenge. Ethanol, a renewable gasoline alternative, has a much higher octane rating and heat of vaporization than conventional gasoline, therefore, ethanol fuels are one of the options to prevent knock in downsized engines. However, the performance of ethanol blends in modern downsized engines, and the contributions of the research octane number (RON), octane sensitivity (defined as RON-MON) and charge cooling to suppressing engine knock are not fully understood. In this study, eight fuels were designed and tested, including four splash blended ethanol fuels (10 vol.%, 20 vol.%, 30 vol.% and 85 vol.% ethanol, referred to as E10, E20, E30 and E85), one match blended fuel (E0-MB) with no ethanol content but the same octane rating as E30, and three fuels (F1-F3) with different combinations of RON and octane sensitivity. The experiments were conducted in a single-cylinder direct-injection spark ignition (DISI) research engine. Load and spark timing sweep tests at 1800 rpm were carried out for E10-E85 to assess the combustion performance of these ethanol blends. In order to investigate the impact of charge cooling on combustion characteristics, the results of the load sweep for E0-MB were compared to those of E30. Load sweep tests were also carried out for F1-F3 to understand the impacts of RON and octane sensitivity on suppressing engine knock. The results showed that at the knock-limited engine loads, splash blended ethanol fuels with a higher ethanol percentage enabled higher engine thermal efficiency through allowing more advanced combustion phasing and less fuel enrichment for limiting the exhaust gas temperature under the upper limit of 850 °C, which was due to the synergic effects of higher RON and octane sensitivity, as well as better charge cooling. In comparison with octane sensitivity, RON was a more significant factor in 2 improving engine thermal efficiency. Charge cooling reduced engine knock tendency through lowering the unburned gas temperature.