Comparative experiments of oil and water-cooling were performed on a 4-cylinder automotive gasoline engine and a single-cylinder direct injection Diesel engine. Measurements were made to investigate the variation of fuel consumption, combustor wall temperature and engine emissions (HC, CO, NO_x and smoke) with two cooling media at steady-state conditions. Significant improvement of fuel economy was found mainly at partial load conditions with oil-cooling in comparison with the baseline water-cooling both for the two engines. The experimental results also showed general trend of reduction in engine emissions using oil as the coolant. Measurements of wall temperature demonstrated that oil-cooling resulted in considerable increase of the combustor wall temperature and reduce of warm-up period in starting process. For automotive gasoline engine, road tests indicated the same trend of fuel economy improvement with oil-cooling. The performance of the automotive oil-cooled engine was further improved by internal cooling with water or methanol injection.