A highly efficient low-emission co-generation system using a 2000-cc common-rail direct-injection (CRDI) diesel engine with an after-treatment device (re-combustor) is developed. The co-generation concept is utilized to produce electric power by a generator as well as to recover waste heat from the exhaust gases. A re-combustor is installed at the exhaust gas outlet to perform secondary burning of the exhaust gases, resulting in an improvement of the system's thermal efficiency as well as a reduction of exhaust gas emissions. The main components of the re-combustor are coiled Pyromax wires installed in a ceramic housing, diesel oxidation catalyst (DOC), and diesel particulate filter (DPF). The tests are conducted at four water flow rates (10, 15, 20, and 25 LPM) and four electric power outputs (5, 15, 25, and 35 kW). In general, a great deal of time and expense are required to determine the optimum experimental conditions for the maximum efficiency of a co-generation system. However, in the present study, the optimum experimental conditions for the present system are found using the Taguchi method and analysis of variance (ANOVA), resulting in significant savings of time and expense. The results show that the present co-generation system achieves a maximum total efficiency of 85.7%, and a significant reduction of CO, NOx, and PM by 73.3%, 34.3%, and 94%, respectively.