As the fourth stage of China’s fuel consumption limits for heavy commercial approaches, engine manufacturers are facing huge challenges. Here, the impact of different strategies on brake thermal efficiency (BTE) was studied through experiments and simulations, and the main energy loss items were obtained based on energy and exergy analysis. According to experimental results, the removal of exhaust gas recirculation (EGR) mainly reduced exhaust losses, resulting in a 0.5% increase in BTE at 1200 r/min. Turbocharger scheme 2, with a high flow rate and high efficiency, was beneficial in reducing pumping losses. Owing to consistent brake power, simultaneously increasing the compression ratio and peak firing pressure can reduce the exhaust losses and combustion irreversibility. When fuel injection quantity was constant, the use of high flow injectors could advance CA50, thereby increasing output power and reducing exhaust losses. Finally, the actual development of the new engine was completed, and the test results showed that the maximum BTE reached 46.9%, and CO and soot emissions were reduced by 74.2% and 78.3%, respectively. Therefore, for medium-sized diesel engines, adopting the non-EGR route, using high flow turbochargers and injectors, and increasing compression ratio can effectively improve BTE and reduce carbon emissions.