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A new 1.2L inline 3-cylinder supercharged gasoline engine was developed to improve fuel efficiency and to meet EURO 5 emission regulations. The engine was designed with a high compression ratio, heavy exhaust gas recirculation (EGR), and a long stroke to improve fuel efficiency. The Miller cycle and a direct fuel injection system were applied to this engine in order to mitigate the occurrence of knock due to the high compression ratio. In addition, a supercharging system was adopted to compensate for the decline in charging efficiency due to the Miller cycle. The design of a direct injection gasoline engine involves a lot of problems such as reduction of oil dilution, stabilization of combustion at first idle retarded, improvement of air-fuel mixing homogeneity, and strengthening of the gas flow. It is hard to resolve these problems independently due to their complexities and difficult nature. Reducing wall wetting by the fuel spray can improve oil dilution in a small engine.