Based on 1.9L small non-road diesel engine, mechanical and combustion system were redesigned and optimized to improve the emission performance. The engine block structure such as ribs, bolt hole depth and water jacket were optimized to improve the strength and stiffness and reduce the block’s distortion. The type of piston ring, piston skirt profile and their fit clearances were also optimized, and plat-honing cylinder liner was used to reduce the oil consumption. In combustion system, fuel injection pump, injection nozzle, fuel spray distribution and fuel supply advance angle were modified, combustion chamber was changed to small platform dumbbell-shaped chamber, and the closed-loop exhaust gas recirculation (EGR) system controlled by negative pressure was applied to trade-off the emissions of NOX and PM. The test results show that the emission performance of optimum diesel engine could meet EPA IV emission regulations.