The effects of exhaust gas recirculation on diesel engine combustion and soot/NOx emissions are numerically studied. The primary and secondary atomization is modelled using the wave instability breakup model. Autoignition of a diesel spray is modelled using the Shell ignition model. Soot formation is kinetically controlled and soot oxidation is represented by a model which account for surface chemistry. The NOx formation is based on the extended Zeldovich NOx model. Effects of injection timing and concentration of $O_{2}$ and CO$_{2}$ on the pollutant formation and the combustion process are discussed in detail.