The growing attention on the environment, revived research interests on the usage of alternative energy sources for diesel engines and to improve the combustion efficiency of the engines. In this regard a new concept of HCCI (Homogeneous Charge Compression Ignition) combustion technology has been considered which promotes highly efficient combustion and produce low emissions and also usage of oxygenated fuels in HCCI engines leads to reduction in emissions like hydrocarbon (HC) and carbon monoxide (CO), since HCCI has increased HC and CO emissions. HCCI offers less pollutant emissions like NOX and PM. HCCI engine technology is the most adoptable technology for next generation engines to reduce emissions for cleaner environment. This study investigates the effects of the oxygenated fuels, ignition improvers and operating conditions on the HCCI combustion and emissions from it. HCCI combines the characteristics of Spark-Ignition (SI) and Compression Ignition (CI). HCCI engines can operate on gasoline, diesel and most alternative fuels. This paper reviews the parameters involved in HCCI engine technology that fuelled with alternate fuels having high oxygen percentage and also the challenges involved in HCCI combustion.