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 September 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  November  10,  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 September 30, 2005

                                      INDEX

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

Item 1.       Condensed Financial Statements

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

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

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

              Notes to Financial Statements                                   6

Item 2.       Management's Discussion and Analysis of                        12
              Financial Condition and Results of Operations

Item 3.       Quantitative and Qualitative Disclosures about Market Risk     14

Item 4.       Controls and Procedures                                        14


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)
                                                            SEPTEMBER 30,     December 31,
                                                          ---------------------------------
                                                                2005             2004
                                                             (Unaudited)
                                                          ----------------  ---------------
<S>                                                       <C>               <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                 $           494   $        4,265
Accounts receivable, net of allowance of $8 and $12 in
  2005 and 2004, respectively                                         101              145
Inventories                                                           265              387
Other current assets                                                   85               71
                                                          ----------------  ---------------

TOTAL CURRENT ASSETS                                                  945            4,868
Patents, net                                                          530              418
Fixed assets, net of accumulated depreciation of $233 in
  2005 and $188 in 2004, respectively                                 193              200
Other assets                                                           27               27
                                                          ----------------  ---------------
TOTAL ASSETS                                              $         1,695   $        5,513
                                                          ================  ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses                                 468              391
                                                          ----------------  ---------------
TOTAL CURRENT LIABILITIES                                             468              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                                               (38,133)         (34,167)
                                                          ----------------  ---------------

TOTAL STOCKHOLDERS' EQUITY                                          1,227            5,122
                                                          ----------------  ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $         1,695   $        5,513
                                                          ================  ===============
</TABLE>

See notes to condensed financial statements.


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

                                                 Three Months Ended         Nine Months Ended
                                                    September 30,             September 30,
                                                  2005         2004         2005         2004
                                               -----------  -----------  -----------  -----------
<S>                                            <C>          <C>          <C>          <C>
Revenue:
Additive revenue                               $       97   $       88   $      283   $      199
Hardware revenue                                       56          135          314          280
License and royalty revenue                            13           18           29           49
                                               -----------  -----------  -----------  -----------
Total revenue                                         166          241          626          528

Costs and expenses:
Cost of revenue                                       102          149          373          334
General and administrative                          1,260        1,150        3,635        2,761
Research and development                              222          174          369          344
Patent amortization and other expense                  61           22          125           61
                                               -----------  -----------  -----------  -----------

Loss from operations                               (1,479)      (1,254)      (3,876)      (2,972)
Foreign currency exchange gain/(loss)                 (12)          --         (106)          --
Interest income                                         2           11           16           36
                                               -----------  -----------  -----------  -----------

Net loss attributable to common stockholders   $   (1,489)  $   (1,243)  $   (3,966)  $   (2,936)
                                               ===========  ===========  ===========  ===========

Basic and diluted loss per common share        $    (0.09)  $    (0.08)  $    (0.23)  $    (0.19)
                                               ===========  ===========  ===========  ===========

Weighted average number of common shares
  outstanding - basic and diluted                  17,193       15,757       17,176       15,719
                                               ===========  ===========  ===========  ===========
</TABLE>

See notes to condensed financial statements.


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

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)



                                                           (in thousands)

                                                          NINE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                          2005         2004
                                                       -----------  -----------
<S>                                                    <C>          <C>
OPERATING ACTIVITIES
Net loss                                               $   (3,966)  $   (2,936)
Adjustments to reconcile net loss to cash used in
  operating activities:
    Bad debt                                                    9           --
    Depreciation and amortization                             126           95
    Write-off inventory and patents                            76           --
  Changes in operating assets and liabilities:
    Accounts receivable                                        35          (63)
    Inventories                                                79         (123)
    Other current assets                                      (14)          10
    Accounts payable and accrued expenses                     148          347
                                                       -----------  -----------
Net cash used in operating activities                      (3,507)      (2,670)
                                                       -----------  -----------

INVESTING ACTIVITIES
Patent costs                                                 (185)         (82)
Purchase of fixed assets                                      (79)        (143)
                                                       -----------  -----------
Net cash used in investing activities                        (264)        (225)
                                                       -----------  -----------

FINANCING ACTIVITIES
Proceeds from issuance of common stock, net                              1,785
Proceeds from broker fee credit (2003 fundraising)             --            3
                                                       -----------  -----------
Net cash provided by financing activities                      --        1,788
                                                       -----------  -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS       (3,771)      (1,107)
                                                       -----------  -----------
Cash and cash equivalents at beginning of period            4,265        6,515
                                                       -----------  -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $      494   $    5,408
                                                       ===========  ===========


Non-cash activities
  Accrued expenses settled in common stock             $       71   $       57
</TABLE>


See notes to condensed financial statements.


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

                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 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 nine-month period ended
September  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 September 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,  the  $6.0  million net
fundraising  from  a  private common stock placing completed on November 7, 2005
(see  Note  7)  and  the  cash  balance  of  $494,000  as  of September 30, 2005
management  believes it has sufficient resources to meet the cash needs of Clean
Diesel  into the first quarter of 2007. 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  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.


                                      - 6 -
<PAGE>
NOTE  2:  SIGNIFICANT ACCOUNTING POLICIES

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. CDT recorded
a  foreign  currency loss on its UK bank holdings of $12,000 and $106,000 in the
third  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>
                                SEPTEMBER 30,   December 31,
  (in thousands)                    2005           2004
                               --------------  -------------
<S>                            <C>             <C>
Finished Platinum Plus FBC     $           71  $         142
Platinum concentrate/metal                 74            150
Hardware (ARIS and Purifier)               65             77
Other                                      55             18
                               --------------  -------------
Total inventory                $          265  $         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>
                     Third Quarter    Year to Date
     (in thousands)   2005    2004    2005    2004
                     ------  ------  ------  ------
<S>                  <C>     <C>     <C>     <C>
     REVENUE:
     US              $  104  $  180  $  531  $  302
     UK/Europe            8       0      28       0
     Asia                54      61      67     226
                     ------  ------  ------  ------

     Total Revenue   $  166  $  241  $  626  $  528
</TABLE>


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

<TABLE>
<CAPTION>
                             SEPTEMBER 30,    December 31,
     (in thousands)              2005            2004
                            --------------  --------------
<S>                         <C>             <C>
     US patents, net        $          127  $           79
     Foreign patents, net              403             339
                            --------------  --------------
     Total patents, net     $          530  $          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>
                                            Third Quarter      Year to Date
(in  thousands)                              2005    2004     2005     2004
                                           -------  -------  -------  -------
<S>                                        <C>      <C>      <C>      <C>
Compensation and benefits                  $   809  $   580  $ 2,363  $ 1,658
Occupancy                                      128      125      369      311
Professional                                   241      381      639      603
Other                                           82       64      264      189
                                           -------  -------  -------  -------
Total general and administrative expense   $ 1,260  $ 1,150  $ 3,635  $ 2,761
</TABLE>


                                      - 8 -
<PAGE>
STOCK-BASED COMPENSATION

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>
                                                                      Third Quarter     Nine months YTD
                                                                     2005      2004      2005      2004
                                                                   --------  --------  --------  --------
<S>                                                                <C>       <C>       <C>       <C>
     Net loss attributable to common stockholders as reported      $(1,489)  $(1,243)  $(3,966)  $(2,936)
     Deduct: Total stock-based employee compensation expense
         determined under fair value-based method for all awards,
         net of related tax effects                                  ( 61 )     (140)   ( 678 )     (463)
                                                                   --------  --------  --------  --------
     Pro forma net loss attributable to common stockholders        $(1,550)  $(1,383)  $(4,644)  $(3,399)
     Net loss per share attributable to common stockholders:
     Basic and diluted net loss per common share-as reported       $ (0.09)  $ (0.08)  $ (0.23)  $ (0.19)
     Basic and diluted per common share-pro forma                  $ (0.09)  $ (0.09)  $ (0.27)  $ (0.22)
</TABLE>

In  August  2005  the Clean Diesel Board awarded Walter Copan, newly hired Chief
Technology  Officer,  100,000 options at the then current market price of $1.39.
Clean  Diesel's  standard vesting policy for employees is one-third at grant and
the  remaining  two-thirds  on the first and second anniversary dates. Using the
Black-Scholes  option  valuation model a non-cash compensation value of $104,500
was calculated of which $40,700 is included in the above pro forma table for the
three and nine months ended September 30, 2005.

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 $1.58. 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 for
the nine months ended September 30, 2005.

In  March  2005,  the  Board  of  Directors elected to accelerate the vesting on
363,000  unvested employee option grants representing all unvested 2003 employee
option grants and certain unvested 2004 option grants. Since the market price at
the  time  of  the  vesting  modification  was  below  the option grant price no
additional  expense  was  recognized  on  CDT's  statement  of  operations.  The
remaining  fair value for the 363,000 option grants was $498,000 and is included
in  the  pro forma table above for the nine months ended September 30, 2005. 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  with  respect to these option grants in the statements of operations in
future periods.

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  2,823,387  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.


                                      - 9 -
<PAGE>
STOCKHOLDERS' EQUITY

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 $1.785 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. For
the  three  months  ended  September  30,  2005  and  2004, CDT incurred $500 in
management  fees and for the nine months ended 2005 and 2004 CDT incurred $1,500
of  management  fees.

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  September  30, 2005 and 2004 is $ 6,970 and $4,950,
respectively.

NOTE  5:  CONCENTRATION

For  the quarter ended September 30, 2005, one customer (customer "A") accounted
for 33% of Clean Diesel's revenue. For the comparable three month period in 2004
customer  A also accounted for 25% of Clean Diesel's revenue. For the nine month
period  in 2005 a different customer (customer "B") accounted for 30% of revenue
while  customer  A accounted for 11% of revenue. For the nine-month year-to-date
period  in  2004,  customer  A also accounted for 43% of Clean Diesel'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 $70,000
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>
NOTE  7:  SUBSEQUENT EVENTS

On  November  7,  2005  Clean  Diesel  Technologies,  Inc.  completed  a private
placement of its common stock in which it raised approximately $6.0 million (net
of  $250,000  of  expenses)  and issued approximately 8.89 million shares of its
common  stock  at  approximately $0.70 per share. Of these proceeds, $620,000 is
subject  to  delayed  delivery and will be received within 90 days. In addition,
approximately  $268,000  (380,000  shares)  of  the  placement  was  raised from
directors and management.


                                     - 11 -
<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 $166,000 and
$102,000,  respectively,  versus  2004 revenues and cost of revenues of $241,000
and  $149,000,  respectively. For the nine months to date, 2005 revenue and cost
of  revenue  were  $626,000  and  $373,000,  respectively,  versus  $528,000 and
$334,000,  respectively for the same nine month period in 2004. Revenues consist
of the following:

<TABLE>
<CAPTION>
                                   Third Quarter    Year to Date
     (in thousands)                 2005    2004    2005    2004
                                   ------  ------  ------  ------
<S>                                <C>     <C>     <C>     <C>
     REVENUE:
     Additive revenue              $   97  $   88  $  283  $  199
     Hardware revenue                  56     135     314     280
     License and royalty revenue       13      18      29      49
                                   ------  ------  ------  ------
     Total Revenue                 $  166  $  241  $  626  $  528
</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.

Clean  Diesel  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 third 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. Clean Diesel also saw
significant  increases in additive sales in the mining sector. Hardware sales of
the  Purifier system increased year to date as a result of the completion of the
State  of  Pennsylvania  grant  project,  partially offset by a decrease in ARIS
injector sales.

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.


                                     - 12 -
<PAGE>
General  and  administrative  expenses  increased  $110,000 to $1,260,000 in the
third  quarter  2005  from  $1,150,000 in 2004 and year to date the increase was
874,000 to $3,635,000 versus $2,761,000 in the same 2004 period as summarized in
the following table:

<TABLE>
<CAPTION>
                                                Third Quarter    Year to Date
     (in  thousands)                             2005    2004    2005    2004
                                                ------  ------  ------  ------
<S>                                             <C>     <C>     <C>     <C>
     Compensation and benefits                  $  809  $  580  $2,363  $1,658
     Occupancy                                     128     125     369     311
     Professional                                  241     381     639     603
     Other                                          82      64     264     189
                                                ------  ------  ------  ------
     Total general and administrative expense   $1,260  $1,150  $3,635  $2,761
</TABLE>

Compensation  and  benefit  expense  increased  as  a  result  of  several staff
additions  in  the  US  and  in  Europe  in  2005 related to increased sales and
marketing  efforts  and  a  new Chief Technology Officer. 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  increased $48,000 to $222,000 in the third
quarter  2005  from  $174,000  in 2004. For the nine months year to date in 2005
research  and  development  increased $25,000 to $399,000 from $344,000 in 2004.
The  increase  in  research  and development in third quarter 2005 is due to the
additional requested EPA testing on the Platinum Plus FBC.

Patent  amortization  and  other costs increased to $61,000 in the third quarter
2005  versus  $22,000  in  2004.  For  the  nine  months  to date in 2005 patent
amortization  and  other  costs  increased to $125,000 from $61,000 in 2004. The
2005  increase  is  related  to  higher  amortization  related  to  prior period
capitalization  and  non-capitalizable  patent  expenses  incurred  in  2005. In
addition  in  the third quarter 2005 the Company wrote-off several international
patents determined to be commercially unviable which amounted to $32,500.

Interest  income  decreased  to $2,000 in the third quarter 2005 from $11,000 in
2004.  For  the nine months to date in 2005 interest income decreased to $16,000
from $36,000 in 2004. The decrease is due to the higher amount of invested funds
in the first half 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 $33,381,000 (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  nine  months  ended  September  30,  2005  and  2004, CDT used cash of
$3,507,000 and $2,670,000 respectively, in operating activities.

At  September  30, 2005 and December 31, 2004, CDT had cash and cash equivalents
of  $494,000  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 2006 as it
further pursues its commercialization efforts.

In November 2005 Clean Diesel Technologies received $6 million (net of $250,000)
expenses  through  a  private  placement  of its common. The price of the common
stock  was  0.40  GBP per share (approximately $0.70 per share). The proceeds of
the  common  stock issuance are being used for the general corporate purposes of
Clean Diesel Technologies.

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.


                                     - 13 -
<PAGE>
In  September  2004,  Clean  Diesel Technologies received $1.785 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, 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,  the  $6.0  million net
fundraising  from  a  private common stock placing completed on November 7, 2005
(see  Note  7)  and  the  cash  balance  of  $494,000  as  of September 30, 2005
management  believes it has sufficient resources to meet the cash needs of Clean
Diesel  into the first quarter of 2007. 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  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 its
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.


                                     - 14 -
<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
             None

Item  5.     Other Information
             None

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

                    None

             b.     Reports on Form 8-K

                    None


                                     - 15 -
<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: November 14, 2005               By:  /s/Bernhard  Steiner
                                           ----------------------------------
                                           Bernhard Steiner
                                           Director and
                                           Chief Executive Officer



Date: November 14, 2005               By:  /s/David W. Whitwell
                                           ----------------------------------
                                           David W. Whitwell
                                           Chief Financial Officer,
                                           Vice President and Treasurer


                                     - 16 -