This study explores the use of wet ethanol as a fuel for HCCI engines while using an exhaust gas heat exchanger to provide the input energy for igniting the fuel. Experiments investigating HCCI combustion were conducted using a VW 4-cylinder engine equipped with an exhaust gas heat exchanger connected to one cylinder. Fuel blends ranged from 100% ethanol to 70% ethanol by volume, with the balance being water. These blends are directly formed in the process of ethanol production from biomass. Comprehensive data was collected for operating conditions ranging from intake pressures of 1.4 bar to 2.0 bar and equivalence ratios ranging from 0.25 to 0.55. A second set of experiments was then conducted at higher pressures and higher equivalence ratios. The heat exchanger was used to preheat the intake air and thus sustain heat within the combustion engine allowing HCCI combustion without electrical heating. The results suggest that the best operating conditions for the HCCI engine and heat exchanger system in terms of high power output, low ringing, and low nitric oxide emissions occur with high intake pressures, high equivalence ratios and highly delayed combustion timings. With a 2 bar absolute intake pressure, an equivalence ratio of 0.55, and combustion timing near 8 CAD ATDC, 70% ethanol produced a power output of nearly 7.25 bar gross IMEP with low ringing and low nitric oxide emissions. This operating point was sustained by using heat transfer from hot exhaust gases into the intake mixture, and thus no external heat addition was required.