Direct injection diesel engine combustion system offers improvements in performance and fuel economy benefits. 4 valves per cylinder, turbocharged and intercooled diesel engine became trustworthy for automobile application. Electronic diesel control, use of common rail with increase in injection pressures, and flexibility in injection control has changed the image of diesel engine. Evolutions in piston crown shape, intake ports with different swirl level helped to enhance mixing of air and fuel for better performance and emissions. In this describe the work done on 4 cylinder diesel engine, upgraded to BS5 (Bharat stage 5) emission norms with 20% power increase. A systematic approach of engine development was fallowed. Engine performance prediction was done using AVL Boost software. Boost Model was validated with existing engine cylinder pressure. Combustion parameters have been varied to predict higher power. Vehicle model has been build using AVL cruise software and used to obtain steady state load- speed points. Engine emission development has been done on engine test bench. Typical hardware like piston crown, turbocharger, EGR system with EGR cooler and various combustion parameters were tested and optimized. Suitable after-treatment system was selected optimized for precious metal loading reach Bharat stage 5 emissions.