The Istituto Superiore di Sanità (ISS, the National Institute of Health of Italy) and the Istituto dei Motori (IM) of the Consiglio Nazionale delle Ricerche (CNR, National Research Council) have carried out this study, jointly funded by the two institutes together with the Ministry of Environment. The chemical and toxicological characteristics of emissions from two urban bus engines were studied: a diesel engine fueled with both diesel oil and biodiesel blend and an equivalent spark-ignition one fuelled with compressed natural gas, operating in steady-state conditions. Regulated and unregulated pollutants, such as carcinogenic polycyclic aromatic hydrocarbons and nitrated derivatives, carbonyl compounds and light aromatic hydrocarbons were quantified. Mutagenicity of the emissions was evaluated by the Salmonella typhimurium/mammalian microsome assay. The effect of the fuels under study on the size distribution of particulate matter was also evaluated. The impact of diesel-powered transport on urban air quality, and the potential benefits for human health deriving from the use of natural gas for public transport, are discussed.