The impacts of different fuel injection timings (base (15BTDC) and retarded (12BTDC)) on a single cylinder common rail direct injection (CRDI) compression ignition (CI) engine under dual fuel mode (DME-diesel) was examined at the maximum torque with the engine speed of 2200 rpm. The diesel (liquid) fuel was directly injected into the engine’s cylinder at the end of the compression stroke and Dimethyl ether (gas) fuel was injected into the intake system of the engine during the suction stroke. The maximum DME energy share (DME ES) with base injection timing (15BTDC) under controlled auto-ignition (CAI) is limited to 52%. Delayed injection timing prevents knock occurrence to a certain extent due to the lower peak combustion pressure and temperature. The DME energy share (DME ES) without knocking is extended to 58% with delayed injection timing (12BTDC). Three stages of combustion (low-temperature region, high-temperature region and diffusion combustion region) were observed under DME-diesel mode. The low-temperature region (LTR) occurs at the temperature range from 700–900 K whereas high-temperature region (HTR) was at the temperature beyond 1000 K. The cyclic variations with the coefficient of variation (COV) of the important parameters (peak in-cylinder pressure, peak rate of pressure rise and indicated mean effective pressure) were analyzed. NOx emission decreased along with zero smoke emission. However, the other emissions such as CO, HC increased marginally with retarded timing. The notable point emerged from this study is that the retarded injection timing is a promising strategy for enhancement of DME energy share with reduced emissions.