In this work, the fluid flow in a direct injection compression ignition engine and its effects on performance and pollutant emissions are studied by using computational fluid dynamics simulation through developing of variable valve timing system by combination of the optimum valve lifting and late inlet valve closing (LIVC) strategies. For this purpose, an improved version of ECFM‐3Z combustion model coupled with advanced models for NOx and soot formation was used to predict and simulate the combustion characteristics. First, the calculated in‐cylinder pressure, heat‐release rate, soot, and NOx were compared with experimental data and good agreement was obtained. To improve the performance and reduce the emission, various angles of LIVC and different types of valve lifting were compared with those of engine basic mode, and then optimum inlet valve closing (IVC) angle and optimum valve lift were determined. Results showed that in constant opening duration of the inlet valve, the volumetric efficiency increases by increasing the valve lift. In addition, the 25% increase of valve lift relative to basic mode along with optimized IVC angle of 70° crack angle after bottom dead center improves volumetric efficiency and brake power, and reduces considerably soot, NOx, and brake‐specific fuel consumption, while CO emission is increased slightly. © 2016 American Institute of Chemical Engineers Environ Prog, 35: 1430–1440, 2016