Abstract This paper presents further results of the study on fundamental combustion characteristics of gaseous fuels simulated for a biogas produced through a biomass gasification process with a catalyzer. The main work focuses on combustion characteristics of H2–CO blended fuel and the effect of CO2 dilution on it in a spark-ignition engine under the condition of WOT, MBT and a constant speed of 1500 rpm. Equivalence ratio were limited to lower than 0.8 in order to avoid excessive high combustion temperature to damage the engine, and lean conditions were maintained during the experiment to get acceptable economy and emissions. The results show that the BMEP decreases with an increase in dilution rate. The COV of IMEP is lower than 10% under most conditions, while H2 and CO2 have the opposite influence on brake thermal efficiency. CO2 dilution combustion could induce to remarkable decreasing in NOx emission with little decrease in brake thermal efficiency, which benefits for biomass gaseous fuel application. If 500 ppm of NOx emission and 26% of brake thermal efficiency could be viewed as accepted level, the accepted operation range of H2–CO mixture have been obtained.