UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934
     For the quarterly period ended June 30, 2005

                                       or

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF THE SECURITIES
     EXCHANGE  ACT  OF  1934
     For the transition period from ______ to ______

     Commission file number:   0-27432
                             ------------


                         CLEAN DIESEL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                     06-1393453
        --------------                                ---------------
   (State of Incorporation)                 (I.R.S. Employer Identification No.)

Clean Diesel Technologies, Inc.
300 Atlantic Street - Suite 702
Stamford, CT                                            06901-3522
(Address of principal executive offices)                (Zip Code)

                                 (203) 327-7050
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.

                                    Yes  X     No
                                        ---       ---


Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Act).

                                    Yes        No  X
                                        ---       ----

As of  August 11, 2005, there were outstanding 17,193,047 shares of Common
Stock, par value $0.05 per share, of the registrant.


<PAGE>
<TABLE>
<CAPTION>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                  Form 10-Q for the Quarter Ended June 30, 2005

                                      INDEX

                                                                          Page
                                                                          ----
<S>                                                                       <C>
PART I.  FINANCIAL INFORMATION

Item 1.    Condensed Financial Statements

           Balance Sheets as of June 30, 2005 (Unaudited),                  3
           and December 31, 2004

           Statements of Operations for the Three and Six Months            4
           Ended June 30, 2005 and 2004 (Unaudited)

           Statements of Cash Flows for the Three and Six Months            5
           Ended June 30, 2005 and 2004 (Unaudited)

           Notes to Financial Statements                                    6

Item 2.    Management's Discussion and Analysis of                         11
           Financial Condition and Results of Operations

Item 3.    Quantitative and Qualitative Disclosures about Market Risk      13

Item 4.    Controls and Procedures                                         13


PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings
Item 2.    Changes in Securities
Item 3.    Defaults upon Senior Securities
Item 4.    Submission of Matters to a Vote of Security Holders
Item 5.    Other Information
Item 6.    Exhibits and Reports on Form 8-K


SIGNATURES & CERTIFICATIONS
</TABLE>


                                      - 2 -
<PAGE>
<TABLE>
<CAPTION>
PART I.     FINANCIAL INFORMATION
Item 1.     Condensed Financial Statements

                            CLEAN DIESEL TECHNOLOGIES, INC.

                               CONDENSED BALANCE SHEETS

                                                           (in thousands, except share data)
                                                                JUNE 30,      December 31,
                                                          ----------------------------------
                                                                 2005            2004
                                                             (Unaudited)
                                                          ----------------  ----------------
<S>                                                       <C>               <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                 $         1,525   $         4,265
Accounts receivable, net of allowance of $18 and $12 in
  2005 and 2004, respectively                                         255               145
Inventories                                                           338               387
Other current assets                                                  113                71
                                                          ----------------  ----------------
TOTAL CURRENT ASSETS                                                2,231             4,868
Patents, net                                                          537               418
Fixed assets, net of accumulated depreciation of $246 in
  2005 and $188 in 2004, respectively                                 203               200
Other assets                                                           27                27
                                                          ----------------  ----------------
TOTAL ASSETS                                              $         2,998   $         5,513
                                                          ================  ================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses                                 282               391
                                                          ----------------  ----------------
TOTAL CURRENT LIABILITIES                                             282               391

STOCKHOLDERS' EQUITY:
Preferred Stock, par value $0.05 per share,
100,000 shares authorized, no shares issued
  and  outstanding                                                     --                --
Common Stock, par value $0.05 per share, authorized
  30,000,000 shares, issued and outstanding
  17,193,047 and 17,165,868 shares respectively                       860               858
Additional paid-in capital                                         38,500            38,431
Accumulated deficit                                               (36,644)          (34,167)

                                                          ----------------  ----------------
TOTAL STOCKHOLDERS' EQUITY                                          2,716             5,122
                                                          ----------------  ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $         2,998   $         5,513
                                                          ================  ================
</TABLE>

See notes to condensed financial statements.


                                      - 3 -
<PAGE>
<TABLE>
<CAPTION>
                           CLEAN DIESEL TECHNOLOGIES, INC.
                               STATEMENTS OF OPERATIONS
                                     (Unaudited)

                                                         (in thousands except per share data)


                                                 Three Months Ended       Six Months Ended
                                                      June 30,                June 30,
                                                  2005        2004        2005        2004
                                               ----------  ----------  ----------  ----------
<S>                                            <C>         <C>         <C>         <C>
Revenue:
Additive revenue                               $      91   $      56   $     186   $     113
Hardware revenue                                     166          25         258         144
License and royalty revenue                           11          12          16          30
                                               ----------  ----------  ----------  ----------
Total revenue                                        268          93         460         287

Costs and expenses:
Cost of revenue                                      161          53         271         185
General and administrative                         1,210         821       2,375       1,611
Research and development                              88          90         147         170
Patent amortization and other expense                 25          27          64          39
                                               ----------  ----------  ----------  ----------

Loss from operations                              (1,216)       (898)     (2,397)     (1,718)
Other income (expense):
Foreign currency exchange gain/(loss)                (75)                    (94)
Interest income                                        5          13          14          25
                                               ----------  ----------  ----------  ----------

Net loss attributable to common stockholders   $  (1,286)  $    (885)  $  (2,477)  $  (1,693)
                                               ==========  ==========  ==========  ==========

Basic and diluted loss per common share        $   (0.07)  $   (0.06)  $   (0.14)  $   (0.11)
                                               ==========  ==========  ==========  ==========

Weighted average number of common shares
  outstanding - basic and diluted                 17,171      15,679      17,168      15,679
                                               ==========  ==========  ==========  ==========
</TABLE>

See notes to financial statements.


                                      - 4 -
<PAGE>
<TABLE>
<CAPTION>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                         (in thousands)

                                                        Six Months Ended
                                                            June 30,
                                                         2005      2004
                                                       --------  --------
<S>                                                    <C>       <C>
OPERATING ACTIVITIES
Net loss                                               $(2,477)  $(1,693)
Adjustments to reconcile net loss to cash used in
  operating activities:
    Bad debt                                                 6        --
    Depreciation and amortization                           83        61
  Changes in operating assets and liabilities:
    Accounts receivable                                   (116)       35
    Inventories                                             49       (55)
    Other current assets                                   (42)      (22)
    Accounts payable and accrued expenses                  (38)      (62)
                                                       --------  --------
Net cash used in operating activities                   (2,535)   (1,736)
                                                       --------  --------

INVESTING ACTIVITIES
Patent costs                                              (145)      (48)
Purchase of fixed assets                                   (60)     (105)
                                                       --------  --------
Net cash used in investing activities                     (205)     (153)
                                                       --------  --------

FINANCING ACTIVITIES
Proceeds from broker fee credit (2003 fundraising)          --         3
                                                       --------  --------
Net cash provided by financing activities                   --         3
                                                       --------  --------

NET (DECREASE)INCREASE  IN CASH AND CASH EQUIVALENTS    (2,740)   (1,886)
                                                       --------  --------
Cash and cash equivalents at beginning of period         4,265     6,515
                                                       --------  --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $ 1,525   $ 4,629
                                                       ========  ========

Non-cash financing activities
    Accrued expenses settled in common stock           $    71
</TABLE>

See notes to condensed financial statements.


                                      - 5 -
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2005
                                   (Unaudited)


NOTE 1:  BASIS OF PRESENTATION

The  accompanying  unaudited,  condensed, consolidated financial statements have
been  prepared  in  accordance with generally accepted accounting principles for
interim  financial  information and the instructions to Form 10-Q and Rule 10-01
of  Regulation  S-X. Accordingly, they do not include all of the information and
footnotes  required  by  generally  accepted  accounting principles for complete
financial  statements.  In the opinion of management, all adjustments considered
necessary  for  a fair presentation have been included. All such adjustments are
of  a  normal recurring nature. Operating results for the six-month period ended
June  30,  2005,  are  not  necessarily  indicative  of  the results that may be
expected  for  the year ending December 31, 2005.  The balance sheet at December
31, 2004 has been derived from the audited financial statements at that date but
does  not  include  all the information and notes required by generally accepted
accounting  principles  for  complete  financial  statement  presentation.   For
further  information,  refer  to  the Financial Statements and footnotes thereto
included  in  CDT's  Annual  Report on Form 10-K for the year ended December 31,
2004.

Clean  Diesel  Technologies,  Inc.  ("CDT")  was  incorporated  in  the State of
Delaware  on  January  19,  1994, as a wholly owned subsidiary of Fuel-Tech N.V.
("Fuel  Tech").  Effective  December  12,  1995,  Fuel  Tech  completed a Rights
Offering  of CDT's Common Stock that reduced its ownership in CDT to 27.6%. Fuel
Tech currently holds a 10.6% interest in CDT as of June 30, 2005.

CDT  is  a  specialty  chemical  and  energy  technology  company supplying fuel
additives  and  proprietary  systems that reduce harmful emissions from internal
combustion  engines  while improving fuel economy.  CDT's Platinum Plus FBC fuel
additive,  in  the  US,  is  registered  with  the EPA for on-highway use and in
Europe,  is  approved  under  the VERT-VSET procedure.  The Platinum Plus FBC in
combination  with  a  diesel  oxidation catalyst or a catalyzed wire mesh filter
have both been verified by the EPA for retrofit emission reduction.  The success
of CDT's technologies will depend upon the market acceptance of the technologies
and governmental regulations including corresponding foreign and state agencies.

At  the  present  time,  CDT  cannot  estimate  when, or if, its operations will
generate  positive  cash  flows  from  operations.  CDT does not have any credit
facilities available with financial institutions or other third parties.  If CDT
cannot  generate  cash flow from operations, CDT will be dependent upon external
sources  of  best-efforts  financing,  of which there are no firm commitments or
arrangements.  Based on the current operating plan, management believes that the
cash  balance  as  of June 30, 2005 of $1,525,000 will be sufficient to meet the
cash  needs  into  the  fourth quarter of 2005.  In the future, unless operating
revenues  are  sufficient  to  meet  operating expenses, CDT will need to access
capital  markets  to fund operations by incurring indebtedness or issuing equity
securities.  CDT  is  being assisted by its UK nominated broker, J.M. Finn and a
US  based  investment  advisor, Dominick and Dominick LLC in securing additional
funding.

CDT  can provide no assurance that it will be successful in any future financing
effort  to obtain the necessary working capital to support operations or if such
financing is available, it will be on acceptable terms.  If management is unable
to obtain the necessary financing from external sources, CDT  may need to manage
any  cash  shortfalls by taking measures which may include deferring or reducing
the scope of commercialization efforts, reducing costs and overhead expenses, or
otherwise  curtailing  operations, or obtaining funds by a disposal of assets or
through  arrangements  with  others that may require CDT to relinquish rights to
certain  of  its  technologies, or to license the rights to such technologies on
terms  that are less favorable to CDT than might otherwise be available.  If CDT
is  unable  to  generate  cash  from  operations  or find alternative sources of
funding, it would have an adverse impact on liquidity and operations and CDT may
be unable to continue as a going concern.  The consolidated financial statements
have  been  prepared on a going concern basis and do not reflect any adjustments
that might result from the outcome of this uncertainty.


NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES


                                      - 6 -
<PAGE>
FOREIGN CURRENCY

The  US  dollar  is considered the functional currency for CDT.  CDT maintains a
sterling  bank  account  for  its  UK  representative  office.  Foreign currency
translation  gains  or  losses  are  recognized in the period incurred, which is
included in other income (expense) in the accompanying statements of operations.
CDT  recorded  a  foreign  currency  loss on its UK bank holdings of $75,000 and
$94,000 in the second quarter 2005 and year to date, respectively.

INVENTORIES

Inventories  are  stated  at  the  lower  of  cost  or market and consist of the
following:

<TABLE>
<CAPTION>
                                      JUNE 30,    December 31,
       (in thousands)                  2005           2004
                                   -------------  -------------
<S>                                <C>            <C>
     Finished Platinum Plus FBC    $         123  $         142
     Platinum concentrate/metal              122            150
     Hardware (ARIS and Purifier)             55             77
     Other                                    38             18
                                   -------------  -------------
     Total inventory               $         338  $         387
</TABLE>


REVENUE RECOGNITION

Clean Diesel Technologies generates revenue from the sale of additives including
the  Platinum  Plus  FBC  products  and  concentrate; hardware including the EPA
verified  Purifier  System,  ARIS  injectors and dosing systems; and license and
royalty  fees  from  the  ARIS  2000  System.  CDT  sells  to  end-user  fleets,
municipalities  and  construction companies, as well as fuel resellers, additive
distribution  companies  and  emission  reduction  companies.

CDT  shipping  terms  are  FOB shipping point and revenue is recognized when its
products  are shipped and collections are reasonably assured unless the purchase
order or contract specifically requires CDT to provide installation of hardware.
For  hardware projects where CDT is responsible for installation either directly
or  indirectly (third-party contractor), revenue is recognized when the hardware
is  installed  and/or  accepted  if  the project requires inspection/acceptance.

License  revenue  is  recognized when the license agreement is entered into, the
license  period  commences, the technology rights, information and know-how have
been  transferred  to  the  licensee  and  CDT  does  not  have  any  ongoing
responsibilities  or  performance  requirements  and  collection  is  reasonably
assured.  Royalty  income  is  recognized  when  earned.

During  the  third  quarter  of  2004, the RJM Corporation ceased operations and
consequently  their  ARIS  stationary  license  for  the  North  American market
reverted  back  to  CDT  and thus CDT will not receive any future royalties from
RJM.  CDT had previously received and recognized $1.1 million in license revenue
from RJM in 2000 and 2001 for the exclusive ARIS stationary license in the North
American  market.

In  April  2003,  Clean  Diesel  Technologies  completed a non-exclusive license
agreement  with  Combustion  Component  Associates  Inc.  (CCA)  of  Monroe,
Connecticut,  for the mobile ARIS technology in the US for the remaining life of
the patents, through 2018. Under terms of the agreement, CCA agreed to pay CDT a
$150,000  non-refundable  license  fee  and  the  licensee committed to spend an
additional  $100,000  in  developing,  testing  and  demonstrating  ARIS  mobile
prototypes.  CDT also receives ongoing royalty payments on a per unit basis. CDT
recognized  the $150,000 license revenue in the second quarter of 2003, as there
are  no  significant  ongoing  services  required  to  be  performed  by  CDT.

In  September  2004,  CCA  was  granted  a  limited  two-year non-exclusive ARIS
stationary license for the US market.  The license fee of $150,000 is due by the
end  of  a  two-year trial period.  Similar to the other ARIS license agreements
for  stationary  applications, a per unit royalty of approximately $1,500 (based
on  percentage  of  sales  price)  is  due  for  each  ARIS  system  sold.

In  August  2001,  Clean  Diesel  Technologies  completed  an  exclusive license
agreement  with  Mitsui  Ltd  for  CDT's  ARIS  2000  NOx control system for all
stationary  diesel  power  generators  in  Japan  for  the remaining life of the
patents,  through  2018.  Under  the  agreement,  CDT  received  a nonrefundable
up-front  license  payment  of  $495,000,  and  will  receive  ongoing  standard
royalties  of  between  $1,500  and  $2,500  on  each system sold by Mitsui. CDT
recognized  the  license payment as revenue in 2001, as there are no significant
ongoing  services  to  be  performed  by  CDT.


                                      - 7 -
<PAGE>
In  December  2002,  Clean Diesel Technologies completed an additional exclusive
license  agreement  with Mitsui for the mobile ARIS technology for Japan for the
remaining life of the patents, through 2018. Under terms of the agreement Mitsui
agreed  to  pay  CDT  a  $250,000  license  fee and Mitsui committed to spend an
additional  $200,000  in  developing,  testing  and  demonstrating  ARIS  mobile
prototypes. CDT recognized the $250,000 license revenue in the fourth quarter of
2002,  as  there  are  no  significant  ongoing services to be performed by CDT.

In  May  2005,  CDT  and  Mitsui  Ltd mutually agreed to transfer both  Mitsui's
exclusive ARIS mobile and stationary licenses to DENOX Inc of Japan.  DENOX is a
former  joint  venture  of  Mitsui.  No additional license fees or payments were
involved  and  DENOX agreed to same per unit royalties and terms of the original
license  agreement.

GEOGRAPHIC INFORMATION

CDT  sells  its Platinum Plus additives and licenses its ARIS systems throughout
the world. A geographic breakdown of revenue consists of the following:

<TABLE>
<CAPTION>
                      Second Quarter       Year to Date
     (in thousands)   2005     2004       2005      2004
                    --------  --------  --------  --------
<S>                 <C>       <C>       <C>       <C>
     REVENUE:
     US             $    247  $     55  $    427  $    122
     UK/Europe             8         0        20         0
     Asia                 13        38        13       165
                    --------  --------  --------  --------
     Total Revenue  $    268  $     93  $    460  $    287
</TABLE>

Foreign  assets held by Clean Diesel Technologies consist of capitalized foreign
patents net of accumulated amortization and are as follows:

<TABLE>
<CAPTION>
                               JUNE 30,      December 31,
     (in thousands)              2005            2004
                            --------------  --------------
<S>                         <C>             <C>
     US patents, net        $          114  $           79
     Foreign patents, net              423             339
                            --------------  --------------
     Total patents, net     $          537  $          418
</TABLE>

PATENT EXPENSE

CDT  capitalizes  all  direct  incremental  costs associated with initial patent
filing  costs  and  amortizes the cost over the estimated remaining life of such
patent.  Patents  are reviewed regularly and the remaining carrying value of any
patents deemed not commercial or cost effective are written off.  The expiration
dates  of  CDT's patents, in numerous countries throughout the world, range from
2005  to  2022.

RESEARCH AND DEVELOPMENT COSTS

Costs  relating to the research, development and testing of products are charged
to  operations  as  they are incurred. These costs include test programs, salary
and benefits, consultancy fees, materials and certain testing equipment.

GENERAL AND ADMINISTRATIVE EXPENSE

General and administrative expense is summarized as the following:

<TABLE>
<CAPTION>
                                            Second Quarter       Year to Date
(in thousands)                              2005      2004      2005      2004
                                          --------  --------  --------  --------
<S>                                       <C>       <C>       <C>       <C>
Compensation and benefits                 $    791  $    544  $  1,554  $  1,078
Occupancy                                      129       104       241       186
Professional                                   216       118       398       222
Other                                           74        55       182       125
                                          --------  --------  --------  --------
Total general and administrative expense  $  1,210  $    821  $  2,375  $  1,611
</TABLE>

STOCK-BASED COMPENSATION


                                      - 8 -
<PAGE>
Clean  Diesel Technologies accounts for employee/director stock option grants in
accordance  with  Accounting  Principles Board (APB) Opinion No. 25, "Accounting
for  Stock  Issued  to  Employees"  and its related interpretations. Under CDT's
current  plan,  options may be granted at not less than the fair market value on
the  date  of  grant and therefore no compensation expense is recognized for the
stock  options  granted  to  employees.

If  compensation  expense  for  CDT's plan had been determined based on the fair
value  at  the grant dates for awards under its plan, consistent with the method
described  in SFAS No. 123, CDT's net loss and basic and diluted loss per common
share would have been as follows on a pro forma basis:

<TABLE>
<CAPTION>
                                                                          Second Quarter       6 months YTD
                                                                          2005      2004      2005      2004
                                                                        --------  --------  --------  --------
<S>                                                                     <C>       <C>       <C>       <C>
          Net loss attributable to common stockholders as reported      $(1,286)  $  (885)  $(2,477)  $(1,693)
          Deduct: Total stock-based employee compensation expense
              determined under fair value-based method for all awards,
              net of related tax effects                                 (   80)     (119)     (617)     (323)
                                                                        --------  --------  --------  --------
          Pro forma net loss attributable to common stockholders        $(1,366)  $(1,004)  $(3,094)  $(2,016)
          Net loss per share attributable to common stockholders:
          Basic and diluted net loss per common share-as reported       $ (0.07)  $ (0.06)  $ (0.14)  $ (0.11)
          Basic and diluted per common share-pro forma                  $(0. 08)  $ (0.06)  $ (0.18)  $ (0.13)
</TABLE>

In June 2005 upon his election to CDT's Board of Directors at its annual general
meeting,  John  McCloy II was awarded 50,000 options at the current market price
of  $1.575.  As  with  CDT's policy, non-executive director's options fully vest
upon  grant  and  using  the  Black-Scholes  option  valuation  model a non-cash
compensation value of $59,000 was calculated and included in the above pro forma
table.

In March 2005, the Board of Directors elected to vest all employees outstanding,
unvested 2003 option grants and up to 25,000 unvested 2004 option grants.  Since
the  market price at the time of the vesting was below the option grant price no
additional  expense  was  recognized  on  CDT's  statement  of  operations.  The
remaining  compensation  value  for  the  363,000 of accelerated unvested option
grants  was $498,000 and is included in the pro forma table above.   The 363,000
of  accelerated  option grants represent less than 14 percent of the 2.7 million
option  grants  outstanding  and 81% of the accelerated option grants would have
vested  in  2005.

The CDT Board's decision to accelerate the vesting of these option grants was in
response to the issuance by the FASB of SFAS No. 123R, "share based payment." As
a result of this measure, CDT will not be required to recognize any compensation
expense  in  the  current  year  or  future periods associated with these option
grants.

In accordance with the provisions of SFAS No. 123, for purposes of the pro forma
disclosure the estimated fair value of the options are amortized over the option
vesting period.  The application of the pro forma disclosures presented above is
not representative of the effects SFAS No. 123 may have on operating results and
earnings  (loss)  per  share  in  future years due to the timing of stock option
grants  and  considering  that  options  vest  over  a  period  of two years for
employees (one third at grant, and one-third on the first and second anniversary
respectively)  and  immediately  for  directors.

BASIC AND DILUTED LOSS PER COMMON SHARE

Basic  and diluted loss per share is calculated in accordance with SFAS No. 128,
"Earnings Per Share."   Basic loss per share is computed by dividing net loss by
the  weighted-average  shares  outstanding during the reporting period.  Diluted
loss  per share is computed similar to basic earnings per share, except that the
weighted-average  shares  outstanding are increased to include additional shares
from  the  assumed exercise of stock options and warrants, if dilutive using the
treasury stock method.  CDT's computation of diluted net loss per share does not
include  common  share  equivalents  associated  with  2,763,000  and  2,235,000
options,  respectively,  and  507,000 and 532,000 warrants, respectively for the
2005  and  2004  periods,  as  the  result  would  be  anti-dilutive.

STOCKHOLDERS' EQUITY

Pursuant  to  a  Regulation  S  exemption with respect to an offshore placement,
Clean Diesel Technologies sold, effective October 8, 2004, 426,500 shares of its
common  stock.  The price of the common stock was 1.025 sterling (GBP) per share
(approximately $1.82 per share).  As part of the transaction, retired CEO Jeremy
Peter-Hoblyn  exchanged his deferred salary of $135,400 for 73,587 shares of CDT
common  stock.  The  proceeds of the common stock issuance, was $754,000 (net of
$25,000  in  expenses).


                                      - 9 -
<PAGE>
Pursuant  to  a  Regulation  S  exemption with respect to an offshore placement,
Clean  Diesel  Technologies sold, effective September 28, 2004, 1,000,000 shares
of  its common stock. The price of the common stock was 1.025 sterling (GBP) per
share  (approximately  $1.82  per  share).  The  proceeds  of  the  common stock
issuance,  was  $1.789  million  (net  of  $65,000  in  expenses).

NOTE 3:  RELATED PARTY TRANSACTIONS

CDT  has  a  Management  and  Services  Agreement  with Fuel Tech. The agreement
requires  CDT to reimburse Fuel Tech for management, services and administrative
expenses  incurred on our behalf. CDT has agreed to pay Fuel Tech a fee equal to
an  additional  3%  of the costs paid on behalf of administration (approximately
$500  for  the  quarter).  Currently,  and  for  the  last  three  years CDT has
reimbursed  Fuel  Tech  for  the  expenses  associated  with  one  Fuel  Tech
officer/director who also serves as an officer/director of CDT. CDT believes the
charges under the Management and Services Agreement are reasonable and fair. The
Management  and Services Agreement may be cancelled by either party by notifying
the other in writing of the cancellation on or before May 15 in any year.

NOTE  4:  COMMITMENTS

Clean  Diesel  Technologies  leases  3,925  square feet of administrative office
space at 300 Atlantic Street, Stamford, Connecticut. The five year lease through
March  2009  has  an  annual  cost  of  approximately  $123,000, including rent,
utilities  and  parking.

CDT  leases  400  square  feet  of  administrative space at 23 Bourne House, 475
Godstone  Road in Surrey England.  The two and half year lease through September
2007  has  an  annual  cost  of  approximately  $33,000  including utilities and
communication  services.

CDT  has  signed  a four year lease (through July 2008) for 2,750 square feet of
warehouse  space  in Milford, Connecticut.  Annual rent including utilities will
be  approximately  $21,000.

Effective  October  28,  1994,  Fuel  Tech  granted  two licenses to CDT for all
patents  and  rights  associated  with  its  platinum  fuel catalyst technology.
Effective  November  24, 1997, the licenses were canceled and Fuel Tech assigned
to  CDT  all  such  patents  and  rights  on  terms substantially similar to the
licenses.  In  exchange for the assignment, CDT pays Fuel Tech a royalty of 2.5%
of its annual gross revenue from sales of the platinum fuel catalysts commencing
in  1998.  The royalty obligation expires in 2008. CDT may terminate the royalty
obligation  to  Fuel  Tech  by  payment  of  $4.4  million in 2005 and declining
annually to $3.3 million in 2006, $2.2 million in 2007 and $1.1 million in 2008.
CDT  as  assignee and owner is responsible for maintaining the technology at its
own  expense. A royalty of $7,450 was paid to Fuel Tech for 2004 and the royalty
payable  to  Fuel  Tech  at  June  30,  2005  and  2004  is  $ 4,663 and $2,750,
respectively.

NOTE  5:  CONCENTRATION

For  the  quarter and six months ended June 30, 2005, one customer accounted for
55% and 32% of CDT's revenue. For the comparable quarter and six month period in
2004,  a  different  single customer accounted for 41% and 57% of CDT's revenue.


NOTE  6:  ISSUANCE  OF  STOCK  TO  DIRECTOR  FOR  DIRECTOR'S  FEES

In June 2005 CDT issued 27,000 shares of common stock for payment of the $71,000
of  accrued  2004 non-executive director's fees due to the director.  The shares
are  determined based on the average of the high and low price of the stock each
quarter.


                                     - 10 -
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.


Item 2.     Management's  Discussion  and  Analysis  of  Financial Condition and
Results of  Operations


FORWARD-LOOKING STATEMENTS

Statements  in  this  Form  10-Q  that  are  not  historical  facts,  so-called
"forward-looking statements," are made pursuant to the safe harbor provisions of
the  Private  Securities  Litigation Reform Act of 1995. Investors are cautioned
that  all  forward-looking statements involve risks and uncertainties, including
those detailed in CDT's filings with the Securities and Exchange Commission. See
"Risk  Factors  of  the  Business"  in  Item  1,  "Business,"  and  also Item 7,
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations"  in CDT's Annual Report on Form 10-K for the year ended December 31,
2004.

RESULTS OF OPERATIONS

2005 VERSUS 2004

Revenues  and  cost  of  revenue in the second quarter of 2005 were $268,000 and
$161,000, respectively, versus 2004 revenues and cost of revenues of $93,000 and
$53,000,  respectively.  For  the  six  months to date, 2005 revenue and cost of
revenue  were $460,000 and $271,000, respectively, versus $287,000 and $185,000,
respectively  for  the  same six month period in 2004.   Revenues consist of the
following:

<TABLE>
<CAPTION>
                                     Second Quarter      Year to Date
     (in thousands)                 2005      2004      2005      2004
                                  --------  --------  --------  --------
<S>                               <C>       <C>       <C>       <C>
     REVENUE:
     Additive revenue             $     91  $     56  $    186  $    113
     Hardware revenue                  166        25       258       144
     License and royalty revenue        11        12        16        30
                                  --------  --------  --------  --------
     Total Revenue                $    268  $     93  $    460  $    287
</TABLE>

In  the  foregoing  table "Additive" includes the Platinum Plus FBC products and
concentrate;  "Hardware"  includes  the  EPA  verified  Purifier  System,  ARIS
injectors  and  dosing  systems.

CDT  received  EPA  verification of its Purifier System (FBC and DOC) in October
2003,  and  a second verification for its catalyzed wire mesh filter system (FBC
and  CWMF) in June 2004.  Clean Diesel Technologies has applied for verification
for  emission  reduction  by  CARB for the CWMF/FBC system as well. The Platinum
Plus  FBC  is  registered  with  the  EPA.

Additive  revenue has increased in the second quarter 2005 and year to date as a
result  of  successful demonstration programs and sales of the verified Purifier
System  which  requires the use of the Platinum Plus FBC.  Hardware sales of the
Purifier  system increased in the second quarter and year to date as a result of
the  completion  of  the  State  of  Pennsylvania  grant  project.

Clean Diesel Technologies identified a market opportunity for its urea selective
catalytic  reduction  (SCR)  system,  The ARIS 2000, to reduce NOx in stationary
power  generation  diesel  engines.  The  ARIS  2000  NOx  reduction system is a
single-fluid  injection  and metering system complete with an electronic control
unit  that  can  be  integrated  with  engine electronic and diagnostic systems.
CDT's  business  strategy  is  to  license the ARIS 2000 NOx reduction system to
other  companies for an up-front fee for the technology and information transfer
and  a  separate  on-going  royalty  per  unit  payment.  CDT  currently  has an
exclusive license agreement for both stationary and mobile ARIS applications for
Japan  with  DENOX  Inc  (transferred  from  Mitsui  Ltd in May 2005). CDT has a
non-exclusive  license  for  both stationary and mobile ARIS applications in the
United  States with Combustion Components Associates of Monroe, Connecticut. CDT
previously  had  an ARIS stationary license agreement for North America with the
RJM  Corporation  of  Norwalk  Connecticut, but as of August 2004 RJM was out of
business  and the ARIS license reverted back to CDT.  CDT believes that the ARIS
2000  system  can  most  effectively be commercialized through licensing several
companies  with  a related business in these markets.  Clean Diesel Technologies
is  actively  seeking  additional  ARIS licensees for both mobile and stationary
applications  in  the  US,  Europe  and  Asia.


                                     - 11 -
<PAGE>
General  and  administrative  expenses  increased  $389,000 to $1,210,000 in the
second  quarter  2005  from  $821,000  in 2004 and year to date the increase was
764,000 to $2,375,000 versus $1,611,000 in the same 2004 period as summarized in
the  following  table:

<TABLE>
<CAPTION>
                                            Second Quarter       Year to Date
(in  thousands)                             2005      2004      2005      2004
                                          --------  --------  --------  --------
<S>                                       <C>       <C>       <C>       <C>
Compensation and benefits                 $    791  $    544  $  1,554  $  1,078
Occupancy                                      129       104       241       186
Professional                                   216       118       398       222
Other                                           74        55       182       125
                                          --------  --------  --------  --------
Total general and administrative expense  $  1,210  $    821  $  2,375  $  1,611
</TABLE>

Compensation  and  benefit  expense  increased  as  a  result  of  several staff
additions  in the second half of 2004 in the US and in Europe in 2005 related to
increased sales and marketing efforts and a new CEO. Occupancy increased in 2005
as  a  result  of  the establishment of a UK representative office. Professional
fees also increased primarily due to the creation of a technical advisory board,
additional UK advisors and Sarbanes Oxley section 404 compliance work.

 Research  and  development  expenses  decreased $2,000 to $88,000 in the second
quarter  2005  from  $90,000  in  2004.  For the six months year to date in 2005
research  and  development  decreased $23,000 to $147,000 from $170,000 in 2004.
The  decrease  in  research  and  development  in  2005  is due to the timing of
expenses and projects from year to year.

Patent  amortization  and other costs decreased to $25,000 in the second quarter
2005  versus  $27,000  in  2004.  For  the  six  months  to  date in 2005 patent
amortization  and  other  costs increased to $64,000 from $39,000 in 2004.   The
2005  increase  is  related  to  higher  amortization  related  to  prior period
capitalization  and  non-capitalizable  patent  expenses.

Interest  income  decreased to $5,000 in the second quarter 2005 from $13,000 in
2004.  For  the  six months to date in 2005 interest income decreased to $14,000
from  $25,000  in  2004.   The  decrease is due to the higher amount of invested
funds  in  the  first quarter of 2004 related to the November 2003 fund-raising.

LIQUIDITY AND SOURCES OF CAPITAL

Prior  to  2000,  CDT  was primarily engaged in research and development and has
incurred losses since inception aggregating $31,892,000 (excluding the effect of
the  non-cash  preferred stock dividends on preferred shares prior to conversion
to  common).  CDT  expects  to incur losses through the foreseeable future as it
further  pursues  its  commercialization  efforts.  Although CDT started selling
limited  quantities  of  Platinum Plus additive and the verified Purifier system
and generating some ARIS licensing fees and royalties, operating revenue to date
has  been  insufficient  to  cover  operating  expenses  and CDT continues to be
dependent  upon  proceeds  from  fund  raising  to  finance  its working capital
requirements.

For the six months ended June 30, 2005 and 2004, CDT used cash of $2,535,000 and
$1,736,000  respectively,  in  operating  activities.

At  June  30,  2005  and December 31, 2004, CDT had cash and cash equivalents of
$1,525,000  and  $4,265,000,  respectively.  The  decrease  in  cash  and  cash
equivalents  in  2005  was the result of limited revenues and on-going operating
costs.  CDT  anticipates incurring additional losses through at least 2005 as it
further  pursues  its  commercialization  efforts.

In  October 2004, Clean Diesel Technologies received $754,000 (net of $25,000 in
expenses) through a private placement of 426,500 shares of its common stock. The
price  of  the  common  stock  was  1.025 GBP per share (approximately $1.82 per
share).  The  proceeds  of  the  common  stock  issuance  are being used for the
general  corporate  purposes  of  Clean  Diesel  Technologies.


                                     - 12 -
<PAGE>
In  September  2004,  Clean  Diesel Technologies received $1.789 million (net of
$65,000  in  expenses)  through  a  private placement of 1,000,000 shares of its
common  stock.  The  price  of  the  common  stock  was  1.025  GBP  per  share
(approximately  $1.82  per share). The proceeds of the common stock issuance are
being  used  for  the  general  corporate purposes of Clean Diesel Technologies.

In  December  2003,  Clean  Diesel  Technologies received $3.583 million (net of
$170,000  in  expenses)  through  a private placement of 1,282,600 shares of its
common  stock.  The  price  of  the  common  stock  was  1.70  GBP  per  share
(approximately  $2.92  per  share).

In  September  2003,  Clean  Diesel Technologies received $3.866 million (net of
$39,000  in  expenses)  through  a  private placement of 2,395,597 shares of its
common  stock.  In  conjunction  with  the  private  placement, 230,240 ten year
warrants with an exercise price of $1.63 per share were issued.

At  the  present  time,  CDT  cannot  estimate  when, or if, its operations will
generate  positive  cash  flows  from  operations.  CDT does not have any credit
facilities available with financial institutions or other third parties.  If CDT
cannot  generate  cash  flow from operations, it will be dependent upon external
sources  of  best-efforts  financing,  of which there are no firm commitments or
arrangements.  Based on the current operating plan, management believes that the
cash  balance  as  of June 30, 2005 of $1,525,000 will be sufficient to meet the
cash  needs  into  the  fourth quarter of 2005.  In the future, unless operating
revenues  are  sufficient  to  meet  operating expenses, CDT will need to access
capital  markets  to fund operations by incurring indebtedness or issuing equity
securities.  CDT  is  being assisted by its UK nominated broker, J.M. Finn and a
US  based  investment  advisor, Dominick and Dominick LLC in securing additional
funding.

CDT  can provide no assurance that it will be successful in any future financing
effort  to obtain the necessary working capital to support operations or if such
financing is available, it will be on acceptable terms.  If management is unable
to obtain the necessary financing from external sources, CDT  may need to manage
any  cash  shortfalls by taking measures which may include deferring or reducing
the scope of commercialization efforts, reducing costs and overhead expenses, or
otherwise  curtailing  operations, or obtaining funds by a disposition of assets
or through arrangements with others that may require CDT to relinquish rights to
certain  of  its  technologies, or to license the rights to such technologies on
terms  that are less favorable to CDT than might otherwise be available.  If CDT
is  unable  to  generate  cash  from  operations  or find alternative sources of
funding, it would have an adverse impact on liquidity and operations and CDT may
be  unable  to  continue  as  a  going  concern.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In  the opinion of management, with the exception of exposure to fluctuations in
the  cost  of  platinum,  CDT  is  not  subject  to  any significant market risk
exposure.

CDT  generally  receives  most  income  in United States dollars.  CDT typically
makes  several  payments  monthly  in  various  foreign  currencies  for  patent
expenses,  product  tests  and  registration,  local  marketing  and  promotion,
consultants  and  employees.

ITEM 4.     CONTROLS AND PROCEDURES

CDT  maintains disclosure controls and procedures and internal controls designed
to  ensure  that  information required to be disclosed in it's filings under the
Securities  Exchange Act of 1934 is recorded, processed, summarized and reported
within  the  time  periods specified in the Securities and Exchange Commission's
rules  and  forms.  CDT's  management,  with  the participation of its principal
executive  and  financial  officers,  has  evaluated  the  effectiveness of it's
disclosure  controls  and procedures as of the end of the period covered by this
Quarterly  Report on form 10Q.  CDT's principal executive and financial officers
have  concluded,  based  on  such  evaluation, that such disclosure controls and
procedures were effective for the purpose for which they were designed as of the
end  of  such  period.

There  was no change in CDT's internal control over financial reporting that was
identified  in  connection  with such evaluation that occurred during the period
covered by this Quarterly Report on form 10Q that has materially affected, or is
reasonably  likely  to  materially affect, CDT's internal control over financial
reporting.


                                     - 13 -
<PAGE>
PART II.    OTHER INFORMATION

Item 1.     Legal Proceedings
            None

Item 2.     Changes in Securities
            None

Item 3.     Defaults upon Senior Securities
            None

Item 4.     Submission of Matters to a Vote of Security Holders

At  the  June  9,  2005  Annual  Meeting  of Stockholders of CDT, the holders of
8,888,389  shares of CDT's common stock were present in person or by proxy. This
attendance  was,  according to the records of CDT's Transfer Agent, 51.8% of the
total  of  17,165,867  shares  as  of  the  record  date  of  April  12,  2005.

     (i) the proposal to elect the seven nominees as directors was approved by a
vote  with  respect  to  each  individual,  as  follows:

<TABLE>
<CAPTION>
                         Shares     Shares
Name                       For     Withheld
----                     ------    --------
<S>                     <C>        <C>
Derek R. Gray           8,858,124    30,265
John A. De Havilland    8,858,124    30,265
Charles W. Grinnell     8,858,124    30,265
John J, McCloy, II      8,858,024    30,365
Jeremy D. Peter-Hoblyn  8,857,924    30,465
Bernhard Steiner        8,858,124    30,265
James M. Valentine      8,823,524    64,865
</TABLE>

     (ii)  the  proposal  to ratify the appointment of Eisner LLP as independent
auditors  of  CDT  for  the year 2005 was approved by a vote of 8,886,739 shares
for,  1,422  shares  against  and  no  abstentions.

Item 5.     Other Information

TESTING FOR EPA CONFIRMS EMISSIONS SUBSTANTIALLY LOWER THAN STANDARDS

As previously announced in May 2005, CDT reported results addressing the EPA (US
Environmental Protection Agency) questions on the use of its fuel borne catalyst
(FBC).  Testing  results  from  two independent EPA-accepted laboratories showed
less  than  one  percent  of the platinum emitted is in a potentially allergenic
form  which  is similar to reported amounts for platinum emissions from autocats
and  diesel  catalysts  currently  in  use  worldwide.

The ambient levels of soluble platinum from the use of the Platinum Plus FBC are
hundreds  to thousands of times below the most stringent standards published for
safe  exposure  on a regular basis using an industry-accepted urban canyon model
and  assuming varying levels of FBC market penetration.  The independent testing
results  have  been  submitted  to  EPA.

Item 6.     Exhibits and Reports on Form 8-K
            a.    Exhibits

                  None

            b.    Reports on Form 8-K

                  None


                                     - 14 -
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.
                           SIGNATURES & CERTIFICATIONS



Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
Registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.



Date: August 12, 2005                   By:  /s/Bernhard Steiner
                                             --------------------------------
                                             Bernhard Steiner
                                             Director  and
                                             Chief Executive Officer



Date: August 12, 2005                   By:  /s/David W. Whitwell
                                             --------------------------------
                                             David W. Whitwell
                                             Chief Financial Officer,
                                             Vice President and Treasurer


                                     - 15 -