Abstract Because of the increased need for virtual analysis during the vehicle manufacturing processes, more stringent optimization methods are required for the simulation field. Owing to the use of big data from engine testing, 1D analysis can provide more powerful approaches in the conceptual design phase for car makers. In this study, system-level optimization of dual-loop EGR was performed at both the engine and vehicle level, whereas our previous research had been performed at the engine level. Depending on the virtually developed engine and vehicle models and control scheme from our previous works, improved driving capabilities could be observed under light-duty diesel vehicle systems under the world-harmonized light-vehicles test procedure (WLTP). The numerical model was extended through two steps. The first step includes model conversion from the base engine model with an HP EGR system to a virtual engine model with a dual-loop EGR system. The second step represents mode extension from the virtual engine model with a dual-loop EGR system to a vehicle model with a dual-loop EGR system. Optimizing the dominant parameters and using design of experiment (DoE)-based multi-objective Pareto optimization methods in each step, fuel economy could be improved by approximately, 1.5% and the deNOX rate was approximately 5% that of the conventional NEDC. It is implied that the dual-loop EGR system and gear strategy could improve vehicle performance under difficult driving conditions.