Abstract: Engine emissions becoming stringent, gaseous fuels are gaining prominence as cleaner fuels like LPG and CNG both for stationary and automotive applications. But scarcity of those fuels arises big question for future. Producer gas obtained from biomass gasification can be good alternative for nonrenewable fuels especially in developing country like India, where biomass is available in huge quantity. In the present study simulation based on actual thermodynamic cycle analysis is performed to assess the performance of 118 cc S.I. engine. All the four basic processes taking place in an S.I. engine are analyzed and the values of pressure and temperature at every 2° of crank rotation are found out with the aid of certain assumptions. The model involves good deal of calculations and iterations and hence, it is coded in ‘MATLAB’. The simulation result is validated with the technical specifications provided in the technical manual of the engine. Digital simulation shows with producer gas as a fuel power relatively de‐rated by 8.07% and Thermal Efficiency increased by 18.85% respectively, compared to gasoline.