EGR(exhaust gas recirculation) is an attractive means of improving the fuel economy of spark ignition engines, as it offers the benefits of charge dilution (lower pumping and cooling losses) while allowing stoichiometric fuelling to be retained for applications using the three-way catalysts. However, the occurrence of excessive cyclic variation with high EGR normally prevents substantial fuel economy improvements from being achieved in practice. Therefore, the optimum EGR rate in Gasoline-Hybrid engine should be carefully determined in order to achieve low fuel consumption and low exhaust emission. In this study, 2 liters gasoline engine with E-EGR system was used to investigate the effects of EGR on fuel economy, combustion stability, engine performance and exhaust emissions. EGR tolerance with load variation was found to be more sensitive than with rpm variation. With optimal EGR rates, the fuel consumption was improved by 5.5% while a combustion stability was guaranteed.