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Dual-fuel operation of a direct-injection diesel engine with natural gas fuel can yield a high thermal efficiency almost comparable to the diesel operation at higher loads. The dual-fuel operation, however, at lower loads inevitably suffers from lower thermal efficiency and higher unburned fuel. To improve this problem, engine tests were carried out on a variety of engine parameters including diesel fuel injection timing advance, intake throttling and hot and cooled exhaust gas recirculation (EGR). It was found that diesel injection timing advance gave little improvement in thermal efficiency and increased NOx. Intake throttling promoted better combustion and shortened its duration with a consequent improvement in efficiency at higher natural gas fractions. Hot EGR raised thermal efficiency, reduced smoke levels, and maintained low NOx levels. Cooled EGR reduced NOx emissions but lowered thermal efficiency.