High-efficiency combustion engines, including Otto cycle engines, use a steam-diluted fuel charge at elevated pressure. Air is compressed, and water is evaporated into the compressed air via the partial pressure effect using waste heat from the engine. The resultant pressurized air-steam mixture then burned in the engine with fuel, preferably containing hydrogen to maintain flame front propagation. The high-pressure, steam-laden engine exhaust is used to drive an expander to provide additional mechanical power. The exhaust can also be used to reform fuel to provide hydrogen for the engine combustion. The engine advantageously uses the partial pressure effect to convert low-grade waste heat from engine into useful mechanical power. The engine is capable of high efficiencies (e.g. >50%), with minimal emissions.