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A new diesel combustion concept termed MULDIC (MUL-tiple stage DIesel Combustion), which can reduce NOx emissions at high load conditions, was studied by means of engine tests, combustion observation, and numerical simulation. In MULDIC, the first stage combustion corresponds to premixed lean combustion, and the second stage combustion corresponds to diffusion combustion under high temperature and low oxygen conditions. The engine tests showed that simultaneous reduction of NOx and smoke could be obtained with MULDIC operation, even at an excess air ratio of 1.4. Fuel consumption was higher compared to conventional operation because of premature ignition of the first stage combustion and extremely late second stage injection. However, optimization of the first stage combustion increased the degree of constant volume combustion, and hence the thermal efficiency was increased.