Ethanol, as the most produced renewable biofuel, is considered a promising low-carbon alternative to petroleum-based fuels in the transport sector due to its high energy density and auto-ignition resistance. The lean-burn combustion in spark-ignition (SI) engines has the potential to further improve thermal efficiency in regard to knock mitigation and the reduction of combustion temperature. However, the characteristics of lean-burn combustion in an ethanol-fueled engine in relation to the combustion losses and the gas-exchange process remain unclear, especially for high-load operation. This study contributes with a deeper understanding of the high-load performance of an ethanol-fueled heavy-duty SI engine using lean-burn combustion. Based on the experimental results from a single-cylinder engine test, a 6-cylinder engine model is built by integrating a validated predictive combustion model to characterize the lean-burn combustion process. The engine’s thermal efficiency and combustion phasing are evaluated for knock limited operation and then compared to the theoretical optimum which is regardless of knock. The energy and exergy balances are applied to evaluate the effect of dilution with excess air ratios up to 1.8. Losses through heat transfer, exhaust flow, and incomplete combustion are quantified. In addition, entropy generated through combustion is discussed to identify the relationship between exergy destruction and different operating conditions. In the context of lean-burn combustion, the thermal efficiency at high-load operation incrementally increases from 40.4% at stoichiometric condition to 47.3% at an excess air ratio of 1.8. At the same time, the exergy destruction through combustion increases by 3.3 percentage points across the selected dilution range. Furthermore, the challenging requirements to realize lean-burn combustion with lower exhaust gas temperatures and higher intake boost pressures is assessed through an exergy analysis of the turbocharging system. QC 20230123