The effect of EGR on fuel economy was investigated in a gasoline direct injection engine. The 1-D cycle simulation program of GT-Power was utilized to evaluate fuel consumption rate. At high load, fuel consumption increased by about 2~6% according to EGR rate. Knock mitigation was the main effects, gaining about 80% of the total fuel consumption improvement. At low load, fuel consumption reduction was 0.6~2%, which was much lower than that for high load. The lower improvement of fuel consumption at low load is attributed to solely dilution and chemical effects of exhaust gas.