The purpose of this research is to improve the thermal efficiency of a fuel reforming engine system using low concentration hydrous ethanol that can be produced with lower cost compared to pure ethanol. In this study, we investigated improvement in thermal efficiency of the system by three effects (1) lean burn, (2) high compression ratio, and (3) exhaust heat recovery by fuel reforming. The improvement in thermal efficiency was confirmed in the system with a fuel reformer installed in the exhaust pipe of the engine