With limited reserves and spiralling prices of liquid petroleum fuels and increasing concerns over air pollution and global warming, there is a need for an alternative fuel for transportation in Australia and globally that is plentiful, competitively priced and which produces lower emissions. Dimethyl ether (DME) is a likely candidate with its low emissions, high efficiency, ease of production and suitability for use in conventional diesel engines with only minor modifications. This thesis surveys literature on the supply/demand/risks of liquid fuels for the transport industry, DME properties and production methods, and published research into DME engine emissions. It is expected that the emissions of a DME engine with reduction methods in place will meet Euro 6 emissions standards. However, current research into the effectiveness of DME is quite limited and there is uncertainty about the emissions produced and their sensitivity to the optimal engine design including appropriate engine modifications. Further experimental research is required to measure the emissions from the combustion of DME in a diesel engine under a range of controlled conditions and possible engine modifications including exhaust gas recirculation and oxidation catalytic converters. This project also includes the design and planning for future research including experiments to evaluate the sensitivity of DME emissions to engine modifications such as EGR cooling and the materials for the diesel oxidation catalyst as well as control variables and emission testing standards for the experiments. The proposed ongoing program of research would be an ideal topic for a subsequent undergraduate thesis at the University of Queensland to help establish the foundations for the development of a DME vehicle by the University.