Abstract: A steam engine is provided including a piston having an upper end portion movable upwardly and downwardly within an internal cylindrical surface of a cylinder, toward and away from a top wall to define a first variable volume space while moving away from and toward annular means in sealing engagement with a lower reduced diameter portion of the piston to define a second variable volume space. A connecting rod has an upper end pivotally connected to the piston and a lower end pivotally connected to a crankshaft. A valve assembly is provided for flow of high pressure steam to the second space and for flow from the first space to an outlet during upward movement of the piston and for flow of steam from the second space to the first space during downward movement of the piston. Preferably, the piston has a lower end portion sealingly engaged with a second internal cylindrical surface of the cylinder to define a third space which is connected through breather passages to the exhaust outlet.