A significant challenge in utilizing hydrogen in conventional internal combustion engines is achieving a balance between NOx emissions and brake power output. A lean premixed charge (Lambda ≈ 2.5) allows for efficient and stable combustion with minimal NOx emissions. However, this comes at the cost of reduced power density due to the higher air requirements of the thermodynamic process. While supercharging can mitigate this drawback, it introduces increased complexity, cost, and size. An intriguing alternative is the 2-stroke cycle, particularly in an opposed piston (OP) configuration. This study presents the virtual development of a single-cylinder 2-stroke OP engine with a total displacement of 0.95 L, designed to deliver 25 kW at 3000 rpm. Thanks to its compact size, high thermal efficiency, robustness, modularity, and low manufacturing cost, this engine is intended for use either as an industrial power unit or in combination with electric motors in hybrid vehicles. The overarching goal of this project is to demonstrate that internal combustion engines can offer a practical and cost-effective alternative to hydrogen fuel cells without significant penalties in terms of efficiency and pollutant emissions. The design of this novel engine started from scratch, and both 1D and 3D CFD simulations were employed, with particular focus on optimizing the cylinder’s geometry and developing an efficient low-pressure injection system. The numerical methodology was based on state-of-the-art commercial codes, in line with established engineering practices. The numerical results indicated that the optimized engine configuration slightly surpasses the target performance, achieving 29 kW at 3000 rpm, while maintaining near-zero NOx emissions (<20 ppm) and high brake thermal efficiency (~40%) over a wide power range. Additionally, the cost of this engine is projected to be lower than an equivalent 4-stroke engine, due to fewer components (e.g., no cylinder head, poppet valves, or camshafts) and a lighter construction.