Dimethyl ether (DME) as an alternative fuel for compression ignition engine was investigated by measuring spray development processes, injection rate profiles, engine performance, and exhaust emission characteristics. The results of DME fueled engine were compared with those obtained by fueled with diesel. The experimental results showed that DME has approximately 0.03ms shorter injection delay and higher maximum injection rate than those of diesel fuel at a constant injection pressure of 50MPa. The spray visualization indicates that DME has shorter spray tip penetration due to its low density and faster evaporation. The combustion characteristics of DME operated engine provided faster ignition delay and three times shorter combustion duration. It is believed that the better evaporation and atomization characteristic of DME contributes the faster combustion. At all operating condition, soot emission was not detected due to the clean combustion of DME.