The combustion and exhaust emission characteristics were investigated in an DME fueled HCCI engine. Carbon dioxide, nitrogen and mixed gas, which was composed of carbon dioxide and nitrogen, were used as control parameters of combustion and exhaust emission. As the oxygen concentration in induction air, which was occurred by carbon dioxide, nitrogen and mixed gas, was reduced, the start of auto-ignition was retarded and the burn duration was extended due to obstruction of combustion and reduction of combustion temperature. Due to these fact, indicated mean effective pressure was increased and indicated combustion efficiency was decreased by carbon dioxide, nitrogen and mixed gas. In case of exhaust emission, hydrocarbon and carbon monoxide was increased by reduction of oxygen concentration in induction air. Especially, partial burning was appeared at lower than about 18% of oxygen concentration by supplying carbon dioxide. However it was overcome by intake air heating.