The introduction of a diesel engine into the passenger car and light duty applications in the United States involves significant technical challenges for the automotive makers. This paper describes the SCR System optimization procedure for such a diesel engine application to meet Tier2 Bin5 emission regulation. A urea SCR system, a representative $NO_x$ reduction after-treatment technique, is applied to a 3.0 liter diesel engine. To achieve the maximum $NO_x$ reduction performance, the exhaust system layout was optimized using series of the computational fluid dynamics and the urea distribution uniformity test. Furthermore a comprehensive simulation model for the key factors influencing $NO_x$ reduction performance was developed and embedded in the Simulink/Matlab environment. This model was then applied to the urea SCR system and played a key role to shorten the time needed for SCR control parameter calibration. The potential of a urea SCR system for reducing diesel $NO_x$ emission is shown for FTP75 and US06 emission standard test cycle.