Now-a-days, diesel engines are more popular over gasoline engines due to their undisputed benefit of fuel economy and higher torque output. However, meeting the stringent emission norms without affecting fuel economy is a major challenge with diesel engines. In this paper, optimization of various parameters like injection parameters, compression ratio (CR) and amount of ultra-cooled exhaust gas recirculation (EGR) has been done for a variable CR (VCR) engine, to achieve low-temperature combustion (LTC) mode by which simultaneous reduction of NOx and soot may be obtained. Taguchi analysis was employed to carry out minimum number of experimental runs and still get the essence of large number of test cases. Effect of those parameters on engine performance and exhaust emissions has also been studied with the help of signal-to-noise (SN) ratio analysis. Results of SN ratio analysis indicate that injection timing, CR and ultra-cooled EGR are the dominant factors while the effect of injection pressure, in range of study, is not much significant for chosen response variables. Flatter and wider HRR traces, hence simultaneous reduction in NOx and PM emissions has been observed for runs having optimized input parameters. NOx and soot found to be reduced by 98% and 60%, respectively, with an increase in brake thermal efficiency (BTE) by 5%. Higher values of HC and CO emissions were found for runs with optimized parameters, but these can be easily reduced by using a catalytic converter, a simple device.