Abstract: An internal combustion engine fueled with a coal-water slurry is described. About 90 percent of the coal-water slurry charge utilized in the power cycle of the engine is directly injected into the main combustion chamber where it is ignited by a hot stream of combustion gases discharged from a pilot combustion chamber of a size less than about 10 percent of the total clearance volume of main combustion chamber with the piston at top dead center. The stream of hot combustion gases is provided by injecting less than about 10 percent of the total coal-water slurry charge into the pilot combustion chamber and using a portion of the air from the main combustion chamber that has been heated by the walls defining the pilot combustion chamber as the ignition source for the coal-water slurry injected into the pilot combustion chamber.