The purpose of this Cooperative Research and Development Agreement (CRADA) between UTBattelle, Inc. and Caterpillar, Inc. was to improve diesel engine efficiency by incorporating advanced materials to enable higher combustion pressures and temperatures necessary for improved combustion. The project scope also included novel materials for use in advanced components and designs associated with waste-heat recovery and other concepts for improved thermal efficiency. Caterpillar initially provided ORNL with a 2004 Tier 2 C15 ACERT diesel engine (designed for on-highway use) and two 600 hp motoring dynamometers. The first year of the CRADA effort was focused on establishing a heavy-duty experimental engine research cell. First year activities included procuring, installing and commissioning the cell infrastructure. Infrastructure components consisted of intake air handling system, water tower, exhaust handling system, and cell air conditioning. Other necessary infrastructure items included the fuel delivery system and bottled gas handling to support the analytical instrumentation. The second year of the CRADA focused on commissioning the dynamometer system to enable engine experimentation. In addition to the requirements associated with the dynamometer controller, the electrical system needed a power factor correction system to maintain continuity with the electrical grid. During the second year the engine was instrumented and baseline operated to confirm performance and commission the dynamometer. The engine performance was mapped and modeled according to requirements provided by Caterpillar. This activity was further supported by a Work-for-Others project from Caterpillar to evaluate a proprietary modeling system. A second Work-for-Others activity was performed to evaluate a novel turbocharger design. This project was highly successful and may lead to new turbocharger designs for Caterpillar heavy-duty diesel engines. During the third (and final) year of the CRADA, a novel valve material was evaluated to assess high temperature performance and durability. A series of prototype valves, composed of a unique nickel-alloy was placed in the engine head. The engine was aggressively operated using a transient test cycle for 200 hours. The valve recession was periodically measured to determine valve performance. Upon completion of the test the valves were removed and returned to Caterpillar for additional assessment. Industrial in-kind support was available throughout the project period. Review of the status and research results were carried out on a regular basis (meetings and telecons) which included direction for future work activities. A significant portion of the industrial support was in the form of information exchange and technical consultation.