With highly oxygenated fuels the smoke emissions decreased sharply and linearly with increases in the fuel oxygen content and entirely disappeared at an oxygen content of $38wt-\%$ even at stoichiometric mixture conditions The NOx also decreased monotonically with increases in oxygen content. and thermal efficiency slightly improved because of a reduction in cooling loss and improvement in the degree of constant volume combustion. The mechanisms of the significant reductions in emissions and improvement in engine performance were analyzed with a bottom view type DI diesel engine. Together with direct flame images, flame images were taken through an optical fetter passing only two wavelengths for use in 2-D two-color analysis. The results showed that luminous flame decreased significantly with increases in oxygen content and was not detected for neat dimethoxy methane(DMM). The decrease in flame luminosity with highly oxygenated fuels corresponds with decreases in soot and cooling losses, including those due to heat radiation. The 2-D two-color flame analysis indicated that the high temperature flame and high KL factor areas apparently decreased with increasing fuel oxygen content. These results correspond strongly with decreases in NOx. smoke. and cooling loss with increases in oxygen content.