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  March  31,  2006

                                       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 (or for shorter period that the registrant was required
to  file  such reports),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 a large accelerated filer,
accelerated  filer,  or  a non-accelerated filer. See definition of "accelerated
filer  and  large accelerated filer" in Rule 12b-2 of the Exchange Act.   (Check
one):
Large Accelerated Filer      Accelerated  Filer       Non-Accelerated  Filer  X
                        ---                     ---                          ---

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).
                             Yes           No   X
                                 ---           ---

As  of  May  11, 2006, there were outstanding 26,100,268 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 March 31, 2006

                                      INDEX

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

Item 1.       Condensed Financial Statements

              Balance Sheets as of March 31, 2006 (Unaudited),              3
              and December 31, 2005

              Statements of Operations for the Three Months                 4
              Ended March 31, 2006 and 2005 (Unaudited)

              Statements of Cash Flows for the Three Months                 5
              Ended March 31, 2006 and 2005 (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                                            15
Item 2.       Changes in Securities                                        15
Item 3.       Defaults upon Senior Securities                              15
Item 4.       Submission of Matters to a Vote of Security Holders          15
Item 5.       Other Information                                            15
Item 6.       Exhibits and Reports on Form 8-K                             15

SIGNATURES & CERTIFICATIONS                                                16
</TABLE>


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

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

                                     CONDENSED BALANCE SHEETS
                                                                (in thousands, except share data)
                                                                MARCH 31,           December 31,
                                                                  2006                  2005
                                                               (Unaudited)
<S>                                                       <C>                  <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                 $            3,895   $            4,513
Accounts receivable, net of allowance of $18 and $11 in
  2006 and 2005, respectively                                            166                  125
Inventories                                                              263                  285
Other current assets                                                     111                   94
Subscription receivable, net                                               0                  488
                                                          -------------------  -------------------
TOTAL CURRENT ASSETS                                                   4,435                5,505
Patents, net                                                             576                  567
Fixed assets, net of accumulated depreciation of $285
  and $259 in 2006 and 2005, respectively                               150                  175
Other assets                                                              27                   27
                                                          -------------------  -------------------
TOTAL ASSETS                                              $            5,188   $            6,274
                                                          ===================  ===================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Deferred revenue                                                          11                    9
Accounts payable and accrued expenses                                    909                  487
                                                          -------------------  -------------------
TOTAL CURRENT LIABILITIES                                                920                  496

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
  26,100,268 and 25,369,358 shares respectively                        1,304                1,268
Common Stock, par value $0.05 per share, subscribed
and to be issued; 705,113 shares in 2005                                   0                   35
Additional paid-in capital                                            44,141               44,068
Accumulated deficit                                                  (41,177)             (39,593)
                                                          -------------------  -------------------
TOTAL STOCKHOLDERS' EQUITY                                             4,268                5,778
                                                          -------------------  -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $            5,188   $            6,274
                                                          ===================  ===================
<FN>
--------------------------------------------------------------------------------------------------
See  notes  to  condensed  financial  statements.
</TABLE>


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

                      (in thousands except per share data)

                                                  Three Months Ended
                                                       March 31,
                                                  2006         2005
                                               -----------  -----------
<S>                                            <C>          <C>
REVENUE:
Additive revenue                               $      150   $       95
Hardware revenue                                       45           92
License, royalty and other revenue                     74            5
                                               -----------  -----------
Total revenue                                         269          192

COSTS AND EXPENSES:
Cost of revenue                                       116          110
General and administrative                          1,529        1,165
Research and development                              218           59
Patent amortization and other expense                  43           39
                                               -----------  -----------

Loss from operations                               (1,637)      (1,181)
Other income (expense):
Foreign currency exchange gain/(loss)                  14          (19)
Interest income                                        27            9
Miscellaneous income                                   12            0
                                               -----------  -----------

Net loss attributable to common stockholders   $   (1,584)  $   (1,191)
                                               ===========  ===========

BASIC AND DILUTED LOSS PER COMMON SHARE        $    (0.06)  $    (0.07)
                                               ===========  ===========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING - BASIC AND DILUTED                  26,085       17,166
                                               ===========  ===========
<FN>

See  notes  to  condensed  financial  statements.
</TABLE>


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

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                          (in thousands)

                                                         Three Months Ended
                                                             March 31,

                                                        2006         2005
                                                     ----------  ------------
<S>                                                  <C>         <C>
OPERATING ACTIVITIES
Net loss                                             $  (1,584)  $    (1,191)
Adjustments to reconcile net loss to cash used in
  operating activities:
    Depreciation and amortization                           42            42
    Write-off patents and bad debt                          17             2
    Non-cash compensation expense for stock options         53            --
  Changes in operating assets and liabilities:
    Accounts receivable                                    (49)          (13)
    Inventories                                             22            92
    Other current assets and security deposits             (18)          (54)
    Accounts payable and accrued expenses                  431            (7)
                                                     ----------  ------------
Net cash used in operating activities                   (1,086)       (1,129)
                                                     ----------  ------------

INVESTING ACTIVITIES
Patent costs                                               (34)          (90)
Purchase of fixed assets                                    --           (50)
                                                     ----------  ------------
Net cash used in investing activities                      (34)         (140)
                                                     ----------  ------------

FINANCING ACTIVITIES
Proceeds from exercise of stock options                     14            --
Proceeds from receipt of subscription receivable           488            --
                                                     ----------  ------------
Net cash provided by financing activities                  502            --
                                                     ----------  ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                 (618)       (1,269)
Cash and cash equivalents at beginning of period         4,513         4,265
                                                     ----------  ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD           $   3,895   $     2,996
                                                     ==========  ============
<FN>

See  notes  to  condensed  financial  statements.
</TABLE>


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

                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2006
                                   (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 with 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 three-month period ended
March  31,  2006,  are  not  necessarily  indicative  of the results that may be
expected  for  the year ending December 31, 2006.  The balance sheet at December
31, 2005 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 the Company's Annual Report on Form 10-K for the year ended December
31,  2005.

Clean Diesel Technologies, Inc. (the "Company" or "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 the Company's Common Stock that reduced its ownership in the Company
to  27.6%.  Fuel Tech currently holds a 7.0% interest in the Company as of March
31,  2006.

The Company 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.  The Company's Platinum Plus
FBC  fuel additive is registered with the EPA for on-highway use and 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 the
Company's  technologies  will  depend  upon  the  market  acceptance  of  the
technologies  and  governmental  regulations including corresponding foreign and
state  agencies.

NOTE  2:  SIGNIFICANT  ACCOUNTING  POLICIES

FOREIGN  CURRENCY

The US dollar is considered the functional currency for CDT.  CDT maintains a UK
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  gain  of $14,000 on its UK bank holdings for the
three  months  ended  March  31,  2006.

INVENTORIES

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

<TABLE>
<CAPTION>
                                     MARCH 31,    December 31,
         (in thousands)                2006           2005
                                   -------------  -------------
<S>                                <C>            <C>
     Finished Platinum Plus FBC    $         125  $          59
     Platinum concentrate/metal               23            119
     Hardware (ARIS and Purifier)             55             55
     Other                                    60             52
                                   -------------  -------------
     Total inventory               $         263  $         285
</TABLE>

REVENUE  RECOGNITION


                                      - 6 -
<PAGE>
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  and  catalyzed  wire mesh filter, ARIS injectors and
dosing  systems;  and license, royalty fees and other revenue from the ARIS 2000
System  and  market  analysis/consulting.  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 but revenue is recognized when its
products are received 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.

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.

DEFERRED  REVENUE

In  January  2006 Clean Diesel signed a one year contract with a new customer to
provide certain consulting and market analysis services for a fee of 130,000 GBP
(approximately  $230,000).  The  Company is recognizing the revenue ratably over
the  12  month  term  of  the contract.  During the three months ended March 31,
2006,  the Company recorded $58,000 of revenues relating to this contract and at
March  31,  2006  recorded  deferred  revenue  of  $11,000.

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>
                       First Quarter
     (in thousands)    2006     2005
                     --------  -------
<S>                  <C>       <C>
     REVENUE:
     US              $    173  $   180
     UK/Europe             85       12
     Asia                  11        0
                     --------  -------
     Total Revenue   $    269  $   192
</TABLE>

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

<TABLE>
<CAPTION>
                             MARCH 31,   December 31,
     (in thousands)            2006         2005
                            ----------  -------------
<S>                         <C>         <C>
     US patents, net        $      151  $         138
     Foreign patents, net          425            429
                            ----------  -------------
     Total patents, net     $      576  $         567
</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
2006  to  2025.

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.


                                      - 7 -
<PAGE>
GENERAL  AND  ADMINISTRATIVE  EXPENSE

General  and  administrative  expense  is  summarized  as  the  following:

<TABLE>
<CAPTION>
                                                  First Quarter
     (in thousands)                               2006     2005
                                                --------  -------
<S>                                             <C>       <C>
     Compensation and benefits                  $  1,126  $   763
     Occupancy                                       106      112
     Professional                                    201      182
     Other                                            96      108
                                                --------  -------
Total general and administrative expense        $  1,529  $ 1,165
</TABLE>

During  the  three  months  ended March 31, 2006, the Company recorded severance
compensation  of  $375,475 relating to the departure of its former President and
Chief Operating Officer, which is being paid in twelve monthly installments.  At
March  31,  2006, accrued expenses include $284,750 relating to this obligation.

STOCK-BASED  COMPENSATION

Effective  January  1,  2006,  Clean  Diesel  adopted  Statement  of  Financial
Accounting  Standards  No.  123  (Revised  2004),  Share Based Payment (SFAS No.
123R),  which  requires a public entity to measure the cost of employee, officer
and  director  services received in exchanged for an award of equity instruments
based  on  the grant-date fair value of the award.  SFAS No. 123R supersedes the
Company's  previous  accounting  under  SFAS No. 123, accounting for Stock-Based
Compensation  (SFAS  No.  123),  which permitted the Company to account for such
compensation  under  Accounting  Principles Board Opinion No. 25, Accounting for
Stock  Issued  to  Employees  (APB No. 25).  Pursuant to APB No. 25, and related
interpretations, no compensation cost had been recognized in connection with the
issuance  of  stock  options,  as  all options granted under the Company's stock
option  plan  had an exercise price equal to or greater than the market value of
the  underlying  common  stock  on  the  date  of  the  grant.

The  Company  adopted  SFAS  No.  123R using the modified prospective transition
method,  which  requires  that  compensation  cost be recorded as earned for all
unvested  stock options outstanding at the beginning of the first fiscal year of
adoption  of  SFAS  No.  123R  based upon the grant date fair value estimated in
accordance  with  the  original  provisions of SFAS No. 123 and for compensation
cost  for  all  share-based  payments  granted  or  modified  subsequent  to the
adoption,  based  on  fair  value estimated in accordance with the provisions of
SFAS  No.  123R.  The  Company's  Financial  Statements  as of and for the three
months  ended March 31, 2006 reflect the impact of SFAS No. 123R.  In accordance
with  the  modified  prospective  transition  method,  the  Company's  Financial
Statements  for  prior  periods  have  not  been restated to reflect, and do not
include, the impact of SFAS No. 123R.  In the three months ended March 31, 2006,
Clean  Diesel  recorded  share-based  compensation  for  options attributable to
employees  and  officers of $53,000, or $0.00 per share which is included in the
Company's  net  loss  for  the  period.

Clean Diesel has a 1994 stock option plan approved by shareholders for officers,
directors,  key  employees  of  the  Company,  and  consultants  to the Company.
Participants  are  eligible  to  receive  incentive  and/or  nonqualified  stock
options.  The  stock  option  plan  allows for total options granted to be up to
17.5%  of  outstanding  common shares.  The stock option plan is administered by
the  Compensation  Committee  of  the  Board  of  Directors.  The  selection  of
participants,  grant  of  options,  determination  of price and other conditions
relating to the exercise of options are determined by the Compensation Committee
of  the  Board  of  Directors and administered in accordance with the 1994 stock
option  plan.

Both  incentive  stock  options  and non-qualified options granted to employees,
officers  and directors under this plan are exercisable for a period of up to 10
years  from  the  date  of grant at an exercise price which is not less than the
fair  market  value  of  the common stock on the date of the grant.  The options
typically  grant  one-third  on grant date and one-third on the first and second
grant  anniversary  dates  except  for Non-Executive Directors for which options
fully  vest  upon  granting.

A summary of the Company's stock option plans activity as of March 31, 2006, and
changes  during  the  three  months  then  ended  is  as  follows:


                                      - 8 -
<PAGE>
<TABLE>
<CAPTION>
                                                               Weighted
                                                 Weighted       average
                                                 average       remaining    Aggregate
                                                 exercise     contractual   intrinsic
                                      Shares      price       term (years)    value
                                   ----------  ------------  -------------  ----------
<S>                                <C>         <C>           <C>            <C>
     Outstanding, January 1, 2006   3,245,936  $       2.06
         Granted                           --           N/A
         Exercised                     15,000          0.90
         Forfeited                     47,167          2.00
         Expired                           --           N/A
                                   ----------  ------------
     Outstanding and expects to
       vest, March 31, 2006         3,183,769  $       2.07            7.7  $   86,000
                                   ==========  ============  =============  ==========

     Exercisable, March 31, 2006    2,814,437  $       2.18            6.6  $   66,000
                                   ==========  ============  =============  ==========
</TABLE>

In  connection  with  the  adoption of SFAS No. 123R, the Company reassessed its
valuation  technique  and  related  assumptions.  The Company estimates the fair
value  of  stock  options using a Black-Scholes valuation model, consistent with
the  provisions of SFAS No. 123R, Securities and Exchange Commission (SEC) Staff
Accounting Bulletin No. 107 and the Company's prior period pro forma disclosures
of  net  earnings,  including  the  fair value of stock-based compensation.  Key
input  assumptions  used to estimate the fair value of stock options include the
expected term until exercise of the option, expected volatility of the Company's
stock,  the  risk free interest rate, option forfeiture rates, and dividends, if
any.  The expected term of the options is based on a historical weighted average
of  exercised  options.  The  expected volatility is derived from the historical
volatility  of  the  Company's stock on the UK London Stock Exchange AIM listing
and the US Over the Counter listings for a period that matches the expected life
of the option.  The risk-free interest rate is the yield from a treasury bond or
note  corresponding to the expected term of the option.  Option forfeiture rates
are  based  on  the  Company's historical forfeiture rates.  The Company has not
paid  dividends  and  does  not  expect  to  pay  dividends  in  the  future.

Compensation costs for stock options with graded vesting are recognized over the
vesting  period.  As of March 31, 2006, there was $253,000 of total unrecognized
compensation  costs  related to granted stock options.  These costs are expected
to  be  recognized  over  a  weighted  average  period  of  1.4  years.

The  weighted-average  grant-date  fair  value  of options granted for the three
months  ended  March  31,  2005  was  $1.06.  The total intrinsic value of stock
options  exercised for the three months ended March 31, 2006 and 2005 was $3,000
and $0, respectively.  In March 2005, the Company accelerated vesting of 363,000
options  with  fair market value of $498,000 in response to the issuance by FASB
of  SFAS  No.  123R.

The  fair  value of each option grant in 2005 was estimated on the date of grant
using  the  Black-Scholes  options-pricing  model  with  the  following weighted
average  assumptions:

<TABLE>
<CAPTION>
<S>                                         <C>
     Expected volatility                    101.9%
     Weighted average expected volatility   101.9%
     Expected dividends                       N/A%
     Expected term (in years)                 4.3
     Risk-free interest rates                4.28%
</TABLE>

SFAS  No.  123  required  disclosure  of net income, on a pro forma basis, as if
expense  treatment  had  been  applied.  Had  the  Company  elected to recognize
compensation  expense  for  the  stock  option  plan, consistent with the method
prescribed  by  SFAS  No. 123R, the Company's net income for the previous period
presented  would  have  changed  to  the  pro  forma  amounts  as  follows:

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                     March 31, 2005
                                                                ------------------------

                                                                 (Amounts in thousands,
                                                                 except per share data)
<S>                                                             <C>
     Net loss attributable to common stockholders as reported   $                (1,191)

     Deduct:  Total stock based employee compensation expense
       Under fair value method for all awards, determined
       Net of related tax effects                                                  (537)
                                                                ------------------------

     Pro forma net income                                       $                (1,728)
                                                                ========================
     Basic and diluted net loss per common share - as reported  $                 (0.07)
     Basic and diluted net loss per common share - pro forma    $                 (0.10)
</TABLE>


                                      - 9 -
<PAGE>
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  3,184,000  and  2,713,000
options,  respectively,  and  507,000 and 532,000 warrants, respectively for the
2006  and  2005  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  November  11, 2005, 8.174 million
shares of its common stock. The price of the common stock was 40 pence (GBP) per
share  (approximately  $0.704  per  share).  The  proceeds  of  the common stock
issuance,  was  $5.5  million  (net  of  $232,000  in  expenses).

In  addition, Clean Diesel Technologies received subscriptions for an additional
$487,500  (net of $12,500 in expenses) related to the November 11th fund-raising
above  for  0.7 million shares of common stock.  The 487,500 was received in the
first  quarter  2006.

NOTE 3: RELATED  PARTY  TRANSACTIONS

The  Company  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.  The Company 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.
The Company 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  $125,000, 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 the Company 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 the Company all such patents and rights on terms substantially similar to the
licenses.  In  exchange for the assignment, the Company 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. The Company may
terminate  the  royalty  obligation  to  Fuel Tech by payment of $3.3 million in
2006,  and  declining annually to $2.2 million in 2007 and $1.1 million in 2008.
The  Company as assignee and owner is responsible for maintaining the technology
at  its  own expense. Royalty expense was $3,756 and $2,404 for the three months
ended  March  31, 2006 and 2005 respectively, and the royalty expense payable to
Fuel  Tech  at  March  31,  2006  and  2005  is $3,756 and $2,404, respectively.


                                     - 10 -
<PAGE>
NOTE 5: CONCENTRATION

For  the quarter ended March 31, 2006 and 2005, Clean Diesel's largest customers
as  a  percentage  of  sales  were  as  follows:

<TABLE>
<CAPTION>
                   First Quarter
     REVENUE:      2006     2005
                 --------  -------
<S>              <C>       <C>
     Customer A       22%       *
     Customer B       13%      13%
     Customer C        *       12%
     Customer D       12%       *
     Customer E        *       24%
</TABLE>

*  Represents  less than 10% revenue for that customer in the applicable period.
There  were  no  other customers that represented 10% or more of revenue for the
shown  periods.

In  addition  to  the  revenue concentration, at March 31, 2006 Clean Diesel has
three  customers  that  represents 55% of its gross accounts receivable balance.
Two  of  the  three  customers  are  the  same  customers  listed in the revenue
concentration  chart  above.


                                     - 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  the  Company'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  the Company's Annual Report on Form 10-K for the year ended
December  31,  2005.

RESULTS  OF  OPERATIONS

2006  VERSUS  2005

Revenues  and  cost  of  revenue  in the first quarter of 2006 were $269,000 and
$116,000,  respectively, versus $192,000 and $110,000, respectively for the 2005
first  quarter.  Revenues  consist  of  the  following:

<TABLE>
<CAPTION>
                   First Quarter
     (in thousands)                2006   2005
                                  -----  -----
<S>                               <C>    <C>
     REVENUE:
     Additive                     $ 150  $  95
     Hardware                        45     92
     License, royalty and other      74      5
                                  -----  -----

     Total revenue                $ 269  $ 192
</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.

     Clean  Diesel  Technologies  has  also  completed VERT and BUWAL testing in
Europe  for  use  of  the  Platinum  Plus  FBC with a diesel particulate filter.

     Additive revenue has increased as a result of the addition of new customers
and expanding sales in several niche markets particularly mining.   The decrease
in  hardware  sales is primarily the result of the timing of ARIS injector sales
and  the  2005  State  of  Pennsylvania  grant  project.

     License,  royalty  and  other  revenue  increased as a result of the income
recognized  for  a  consulting  and  market  analysis project performed by Clean
Diesel  for  a  new  International  customer.

Clean  Diesel's  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
with  DENOX,  Inc.  (transferred  from  Mitsui  Ltd)  for  Japan.  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


                                     - 12 -
<PAGE>
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.

General  and  administrative  expenses  increased  to  $1,529,000  in  2006 from
$1,165,000  in  2005  as  summarized  in  the  following  table:

<TABLE>
<CAPTION>
                                                   First Quarter
     in thousands)                                 2006     2005
                                                 --------  -------
<S>                                              <C>       <C>
     Compensation and benefits                   $  1,126  $   763
     Occupancy                                        106      112
     Professional                                     201      182
     Other                                             96      108
                                                 --------  -------

     Total general and administrative expenses   $  1,529  $ 1,165
</TABLE>

Compensation  and  benefit  expense  increased as a result of the recognition of
$53,000 in non-cash compensation expense relating to stock options granted prior
to  January  1,  2006  as  required  under  Financial Accounting Standards 123R.
Professional  expense  fees  also increased primarily due to additional investor
relations  activity  in  Germany  and  continental  Europe.

Included  in the 2006 first quarter compensation and benefit expense is $357,475
of  severance charges related to the departure of James Valentine, President and
Chief  Operating  Officer.  Clean  Diesel  announced  in  January  2006 that Mr.
Valentine  had  been  "released  from employment and resigned as director of the
company."  The  first  quarter 2006 financials include accrued severance charges
of  $284,750  representing salary and benefit costs for the remainder of the one
year  employment  contract between Clean Diesel and Mr. Valentine which is to be
paid  on  a  monthly  basis.

Research  and development expenses increased to $218,000 in 2006 from $59,000 in
2005.  The  increase in research and development in 2005 is due to the timing of
expenses and projects from year to year and additional laboratory testing on the
CWMF  technology  acquired  from Mitsui and a new bio-fuel additive formulation.

Patent  amortization and other costs increased to $43,000 in 2006 versus $39,000
in  2005.  The  2006 increase is related to higher amortization related to prior
period  capitalization.

Interest  income  increased to $27,000 in 2006 from $9,000 in 2005 due to higher
rates  of return and the higher amount of invested funds in the first quarter of
2006  related  to  the  November  2005  fund-raising.

LIQUIDITY  AND  SOURCES  OF  CAPITAL

Prior to 2000, the Company was primarily engaged in research and development and
has  incurred  losses  since  inception  aggregating  $36,425,000 (excluding the
effect  of  the  non-cash preferred stock dividends on preferred shares prior to
conversion  to  common).  The  Company  expects  to  incur  losses  through  the
foreseeable  future  as  it  further  pursues  its  commercialization  efforts.
Although  the  Company  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 the Company continues to be dependent upon proceeds from
fund  raising  to  finance  its  working  capital  requirements.

For  the  three  months  ended March 31, 2006 and 2005, the Company used cash of
$1,086,000  and  $1,129,000,  respectively,  in  operating  activities.

At  March  31,  2006  and  December  31,  2005,  the  Company  had cash and cash
equivalents  of  $3,895,000  and $4,513,000, respectively.  The decrease in cash
and  cash  equivalents  in  2006 was the result of limited revenues and on-going
operating costs.  The Company anticipates incurring additional losses through at
least  2006  as  it  further  pursues  its  commercialization  efforts.

Pursuant  to  a  Regulation  S  exemption with respect to an offshore placement,
Clean  Diesel  Technologies  sold,  effective  November  11, 2005, 8.174 million
shares of its common stock. The price of the common stock was 40 pence (GBP) per
share  (approximately  $0.704  per  share).  The  proceeds  of  the common stock
issuance,  was  $5.5  million  (net  of  $232,000  in  expenses).


                                     - 13 -
<PAGE>
In  addition, Clean Diesel Technologies received subscriptions for an additional
$487,500  (net  of $12,500 in expense) related to the November 11th fund-raising
above for 0.7 million shares of common stock.  The $487,500 had been received as
of  March  3,  2006.

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.

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.

At  the  present  time,  the Company cannot estimate when, or if, its operations
will  generate  positive  cash flows from operations.  The Company does not have
any  credit  facilities  available  with  financial  institutions or other third
parties.  If  the Company 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 March 31, 2006 of $3.9 million
will be sufficient to meet the cash needs through the first quarter of 2007.  In
the future, unless operating revenues are sufficient to meet operating expenses,
the  Company  may need to access capital markets to fund operations by incurring
indebtedness or issuing equity securities.  The Company 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, the Company  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.

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 and the British Sterling exchange rate, the Company is not
subject  to  any  significant  market  risk  exposure.

The  Company  generally  receives  most  income in United States dollars.  Clean
Diesel  Technologies  maintains  a  UK  bank account and 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

The  Company  maintains disclosure controls and procedures and internal controls
designed  to  ensure  that information required to be disclosed in the Company'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.  The  Company's  management, with the
participation  of  its principal executive and financial officers, has evaluated
the  effectiveness of the Company's disclosure controls and procedures as of the
end  of  the period covered by this Quarterly Report on form 10Q.  The Company'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 the Company'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, the Company'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
           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:  May  11,  2006                    By: /s/Bernhard Steiner
                                             ------------------------------
                                             Bernhard  Steiner
                                             Director,  President  and
                                             Chief  Executive  Officer


Date:  May  11,  2006                    By: /s/David  W.  Whitwell
                                             ------------------------------
                                             David  W.  Whitwell
                                             Chief  Financial  Officer,
                                             Senior Vice President and Treasurer


                                     - 16 -