Further improvement of fuel consumption on the diesel engine is strongly required from the stand point of energy security and environmental protection on a global scale without mentioning about achievement of the stringent future emission regulations. However, conventional actual testing is no longer applied for system optimization of future diesel engine due to high degree of complexity and freedom of its system. Additionally, engine control assumes the important role of providing a good fuel economy under wide-ranging practical operating conditions including emission test mode. Therefore, the total engine simulation system (TESS) is developed as an exploitable integrated tool through all of engine development phase. The TESS can be applied for system planning, design of control logic, embedded to the ECU (Engine Control Unit) for model based control and partially substitute for actual testing. This article mentions about general outline of developed simulation tool and its application for system investigation for future diesel engine. Additionally, approach of model based control for variable valve actuation as a key device is also mentioned as an example.