Abstract: A rotary engine including a compressor, an external pressure vessel, an internal pressure vessel defining a combustion chamber, and a fuel nozzle opening into the combustion chamber. Both compressed air and fuel are pumped into the fuel nozzle. Water is sprayed into the compressed air prior to entering the nozzle. Compressed air and water are directed between the interior and exterior pressure vessels so that the water cools the walls of the interior vessel and is turned to compressed steam. A mixture of steam, compressed air and fuel is formed at the fuel nozzle and is directed into the combustion chamber where it is ignited by an ignitor to produce a high temperature high pressure gas. The high temperature high pressure gas is directed into a dynamic rotor cylinder where its pressure eccentrically rotates a dynamic rotor which is in turn coupled to an output shaft.