EGR system has been widely used to reduce NOx emission in light duty diesel engines, but its application to heavy duty diesel engine is not common yet. In this study, simulation model for EURO-3 engine was developed using commercial code WAVE and then verified by comparison with experimental results in performance and emission. Possibility to meet EURO-4 regulation using modified EURO-3 engine with LPL EGR system was studied. Each components of the engine was modeled using CATIA and WaveMesher. The engine test mode was ESC 13 and injection timing and quantity were changed to compensate engine performances, because applying EGR causes power reduction. As a results of the simulation, it was found that EURO-4 NOx regulation could be achieved by applying LPL EGR system to current EURO-3 engine even with some BSFC deterioration.