We studied a two-stroke free piston linear engine by numerical models and simulation. The numerical models consisted of three parts: dynamic model, linear alternator model, and thermodynamic model. These models were combined and solved by a program written in Fortran. To validate the numerical models, simulation results were compared with experimental data at the same initial conditions. To provide information for the study, the effects of key parameters such as equivalence ratio, reciprocating mass, spark timing, and spring stiffness on the operating characteristics as well as performance of the engine were investigated. The simulation results indicated that by using numerical models as mentioned, the calculation data were closely similar to experimental data. Besides, this engine showed a great benefit for dynamic of piston, electric power output, and performance as spark timing was adjusted near the cylinder head. By decreasing reciprocating mass and increasing spring stiffness, the piston dynamics as well as electric power output of the engine was also improved significantly. In addition, high engine performance could be easily obtained by optimizing the key parameters.