Abstract: A hydraulic external heat source engine wherein energy is supplied to a working end space of the engine by direct application of pressurized and heated liquid working fluid to the piston within a cylinder. The power stroke utilizes expanded hot liquid as the primary pressure source. After fluid intake cut-off, some of the heated liquid spontaneously vaporizes, thereby continuing to drive the working piston. The exhaust liquid working fluid discharged from the cylinder is recycled to an external preheat exchanger for preheating cold compressed working fluid expelled from the pump end space of the engine. The majority of the vapor produced within the cylinder recondenses within the cylinder and is discharged as liquid. The small amount of vapor that is discharged from the cylinder is condensed in an expansion chamber in the preheat exchanger. The preheated fluid is heated to operating temperature and pressure in a primary heat exchanger before being recycled into the working end space.