The main objective of this study is to introduce the applicability of ammonia to the downsized compression ignition diesel engine for power generation or range extender. For this research objective, the two cylinder engine, which was the result of the previous study, fueled with diesel-ammonia blends was considered and the performance and NOx emission tendency were identified using the numerical method. Ammonia was mixed with diesel via injection at a specific fuel energy fraction (0%, 5%, 10%, or 15%) to evaluate the engine performance and emission characteristics. In addition, concept of “in-cylinder reforming” was introduced adopting negative valve overlap (NVO) by advancing the exhaust valve closing time to investigate the effect of adding ammonia as a hydrogen carrier. Subsequently, the primary variables affecting the brake-specific fuel consumption and NOX are determined via multi-objective Pareto analysis. The optimal Pareto front confirms that exhaust valve timing exerts a greater effect on the performance and emissions than injection timing. Moreover, in-cylinder reformed hydrogen was increased under negative valve overlap strategy.