Dimethyl ether (DME) is probably the least known of all available alternative fuels, but it has the potential to provide possibly the largest positive energy and environmental benefits. It has been used in China for years as a substitute or blending agent with LPG as cooking fuel, but its greatest value is as a replacement for diesel fuel in compression ignition (CI) engines. It burns extremely clean compared with diesel fuel, producing no particulates and less than half the CO2 per unit of energy (i.e., travel distance). It has physical properties similar to butane or propane (LPG), a gas at NTP but a liquid at only 5 bar pressure at 22 °C with an energy density about half that of D2 diesel fuel. It is stored in low-pressure LPG tanks with minimum modifications. It requires different fuel injection components compared with D2, a technical challenge that remains an area of development at this time. Like methanol, it is currently made almost entirely from natural gas, except in China where production from coal is more common. But it can also be made efficiently from almost any carbonaceous materials, in particular, cellulosic biomass, which can give it a nearly neutral carbon footprint. In this chapter, DME is introduced as a possible replacement for petroleum diesel fuel, requiring reengineering of the engine’s fuel system, but eliminating the need for emission control equipment.