Experiments were carried out on a turbo-charged, inter-cooled, heavy duty truck’s 6 cylinder diesel engine; ethanol-water blends (the volume fraction of water is 30%) were injected to the retrofitted intake pipe to realize diesel/ethanol water blends compound combustion. The combustion characteristics and economic efficiency at several kinds of speeds and loads with different high diesel substitution rates (0%, 30%, 40%, 50% and 60%) were investigated in steady working condition. The results show that, compared with normal combustion mode, the diesel/ethanol-water blends compound combustion lead to the ignition timing delay, maximum rate of heat release and in cylinder pressure peak rise, combustion duration shorten. When the engine work in low speed, the equivalent specific fuel consumption most decreases by 13%, and the effective thermal efficiency most increases by 8.3%; in high speed, the equivalent specific fuel consumption remains approximately constant, and the fuel economy can even be deteriorated slightly when the diesel substitution rates are more than 30%. The results can be used to guide the application of diesel/ethanol compound combustion in engine.