A rapid compression machine test bench was developed for studying the combustion characteristic of alternative fuel， and the compression performance tests were carried out. After analyzing the influences of the factors such as hydraulic buffer, driven pressure on properties of the rapid compression machine and improving the compression performance, compression speed of the rapid compression machine was higher than 8m/s and the compressed temperature can be controlled in the range of 650~1120K. Combustion performance tests were carried out by using DME-O2-N2 mixtures. The two-stage combustion and two-stage ignition delay time of the mixtures were observed. The two-stage and overall ignition delay times of DME-O2-N2 mixtures were studied under varied compression ratios, compressed temperatures and compressed pressures. Results showed that with the compressed temperature and compressed pressure increased, the first and overall ignition delay times of mixtures were shorten under the same initial pressure. Under a certain compressed temperature, with increasing compressed pressure, the second and overall ignition delay times of mixtures were shorten while the first stage ignition delay time was shorten slightly.