This study presents the implementation of a micro-generation system and its operation procedure, based on a dual fuel diesel engine using natural gas as the primary fuel and conventional diesel as the pilot fuel. On the other hand, the evaluation and validation results by experimental testing of a model according to International Energy Agency—IEA—Annex 42, applied to dual fuel diesel micro-cogeneration system, are also presented. The control procedure for experimental operation depends of both inputs’ electric power generation demand and desired substitution level due a given natural gas availability. The heat recovery system of the micro-generation system uses a gas–liquid compact heat exchanger that was selected and implemented, where wasted heat from exhaust gases was transferred to liquid water as a cool fluid. Effective operation engine performance was determined by measurement of masses’ flow rate such as inlet air, diesel and natural gas, and also operation parameters such as electric power generation and recovered thermal power were measured. Electric power was generated by using an electric generator and then dissipated as heat by using an electric resistors bank with a dissipation capacity of 18kW. Natural gas fuel was supplied and measured by using a sonic nozzle flowmeter; in addition, natural gas composition was close to 84.7% CH4, 0.74% CO2 and 1.58% N2, with the rest of them as higher hydrocarbons. The highest overall efficiency (electric efficiency plus heat recovery efficiency) was 52.3% at 14.4 kW of electric power generation and 0% of substitution level. Several substitution levels were tested at each engine electric power generation, obtaining the maximum substitution level of 61% at 17.7 kW of electric power generation. Finally, model prediction results were closed to experimental results, both stationary and transient. The maximum error presented was close to 20% associated to thermal efficiency. However, errors for all other variables were lower than 10% for most of micro-cogeneration system operation points.