Abstract: A two-cycle internal combustion engine includes two opposed pistons reciprocatable within a cylinder, between which an air-fuel mixture is injected and ignited. One of the pistons, a compression piston, is connected to a rotatable flywheel for storing energy from reciprocation of the compression piston during the adiabatic expansion stroke. The other piston, a power piston, is attached to a pump piston which operates in a hydraulic pump to displace a hydrostatic fluid at a constant reaction pressure but at a variable stroke. Work is removed from this engine through the hydrostatic fluid, which can be fed to a hydrostatic drive unit. The flywheel is not connected to the primary load, but is used principally to drive the compression piston upward during the compression stroke of the engine. During the compression stroke, the air-fuel mixture is compressed and ignited to a pressure determined by the hydraulic reaction pressure in the hydraulic pump.