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,  2001

                                       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
                                ---     ---

As  of May 1, 2001, there were outstanding 2,686,287 shares of Common Stock, par
value  $0.05  per  share,  of  the  registrant.


================================================================================


<PAGE>
                        CLEAN DIESEL TECHNOLOGIES, INC.

                 Form 10-Q for the Quarter Ended March 31, 2001

                                      INDEX


                                                                            Page
                                                                            ----

PART  I.  FINANCIAL  INFORMATION

Item  1.  Financial  Statements  (Unaudited)

          Balance  Sheets  as  of  March  31,  2001,                          3
          and  December  31,  2000

          Statements  of  Operations  for  the  Three                         4
          Months  Ended  March  31,  2001  and  2000

          Statements  of  Cash  Flows  for  the  Three                        5
          Months  Ended  March  31,  2001  and  2000

          Note  to  Financial  Statements                                     6

Item  2.  Management's  Discussion  and  Analysis  of                         9
          Financial  Condition  and  Results  of  Operations


PART  II. OTHER  INFORMATION

Item  1.  Legal  Proceedings                                                 12
Item  2.  Changes  in  Securities                                            12
Item  3.  Defaults  upon  Senior  Securities                                 12
Item  4.  Submission  of  Matters  to  a Vote of Security Holders            12
Item  5.  Other  Information                                                 12
Item  6.  Exhibits  and  Reports  on  Form  8-K                              12


SIGNATURES                                                                   13


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

                         CLEAN DIESEL TECHNOLOGIES, INC.

                                 BALANCE SHEETS

                                                    (in thousands except share data)

                                                        March 31,    December 31,
                                                          2001           2000
                                                       -----------  --------------
                                                       (Unaudited)
<S>                                                    <C>          <C>
ASSETS
Current assets:
Cash and cash equivalents                              $      550   $         541
Accounts Receivable                                            16              50
Inventories                                                   276             287
Other current assets                                           69              87
                                                       -----------  --------------
Total current assets                                          911             965
Other assets                                                   81              92
                                                       -----------  --------------
Total assets                                           $      992   $       1,057
                                                       ===========  ==============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses                  $      374   $         400
                                                       -----------  --------------
             Total Current Liabilities                        374             400

Notes Payable                                               1,000             500
Deferred Compensation and Pension Benefits                    331             308
                                                       -----------  --------------
             Total Long Term Liabilities                    1,331             808

Stockholders' Deficit:
Preferred Stock, par value $.05 per share,
   authorized 85,000 shares, no shares issued
   and outstanding                                             --              --
Series A Convertible Preferred Stock, par
   value $.05 per share, $500 per share
   liquidation preference, authorized 15,000
   shares, issued and outstanding 13,218,
   involuntary liquidation value (including unissued
   dividend shares of 1,827 and 1,424)
   $7,522,500 and $7,321,000                                    1               1
Common Stock, par value $0.05 per share,
  authorized 15,000,000 shares, issued and
  outstanding 2,660,611 shares                                133             133
Additional paid-in capital                                 21,050          20,849
Accumulated Deficit                                       (21,897)        (21,134)
                                                       -----------  --------------
Total Stockholders' Deficit                                  (714)           (151)
                                                       -----------  --------------
Total Liabilities and Stockholders' Deficit            $      992   $       1,057
                                                       ===========  ==============
</TABLE>


See  note  to  financial  statements.


                                      -3-
<PAGE>
<TABLE>
<CAPTION>
                         CLEAN DIESEL TECHNOLOGIES, INC.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                        (in thousands except per share data)

                                               Three  Months  Ended
                                                     March 31
                                                 2001         2000
                                             ------------  -----------
<S>                                          <C>           <C>
Revenue:
Product revenue                              $        13   $       46
License and royalty revenue                           11          260
                                             ------------  -----------
Total revenue                                         24          306

Costs and expenses:
Cost of sales                                          7           22
General and administrative                           435          429
Research and development                              84          139
Patent filing and maintenance                         48           24
                                             ------------  -----------

Loss from operations                                 550          308
Interest income                                       (3)         (10)
Interest expense                                      12            1
                                             ------------  -----------

Net Loss before preferred stock dividend             559          299
Preferred stock dividends(non-cash)                  201          163
                                             ------------  -----------

Net loss attributed to common stockholders   $       760   $      462
                                             ============  ===========

Basic and diluted loss per common share      $      0.29   $     0.18
                                             ============  ===========

Weighted average number of common shares
   Outstanding - basic and diluted                 2,661        2,594
                                             ============  ===========
</TABLE>


See  note  to  financial  statements.


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

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                        (in thousands)


                                                      Three Months Ended
                                                           March 31
                                                      2001          2000
                                                   -----------  -------------
<S>                                                <C>          <C>
OPERATING ACTIVITIES
Net Loss before preferred stock dividend           $     (559)  $       (299)
Adjustments to reconcile net loss to cash used in
   operating activities:
   Depreciation                                             3              3
   Amortization of deferred financing expense              12             --
Changes in operating assets and liabilities:
   Accounts Receivable                                     34             21
   Inventories                                             11             59
   Other current assets                                    18             --
   Accounts payable and accrued expenses                   (8)          (110)
                                                   -----------  -------------

Net cash used in operating activities              $     (489)  $       (326)
                                                   -----------  -------------

FINANCING ACTIVITIES
Proceeds from term loan                                   500             --
                                                   -----------  -------------

Net cash provided by financing activities                 500             --
                                                   -----------  -------------

INVESTING ACTIVITIES
Purchase of fixed assets                                   (2)            (3)
                                                   -----------  -------------
Net cash used in investing activities                      (2)            (3)
                                                   -----------  -------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS                                            9           (329)
                                                   -----------  -------------
Cash and cash equivalents at beginning of period          541            892
                                                   -----------  -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $      550   $        563
                                                   ===========  =============

NON-CASH ACTIVITIES
Preferred stock dividend                                  201            163
</TABLE>


See  note  to  financial  statements.


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

                          NOTE TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (Unaudited)

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, 2001, are not necessarily indicative of the
results  that may be expected for the year ending December 31, 2001. For further
information, refer to the Financial Statements and footnotes thereto included in
the  Company's  Form  10-K  for  the  year  ended  December  31,  2000.

     Clean  Diesel  Technologies,  Inc.  (the "Company") 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 21.5% interest in the Company on a
fully  converted  basis.

     The  Company  is  a specialty chemical company supplying fuel additives and
proprietary  systems  that  reduce  harmful  emissions  from internal combustion
engines  while improving fuel economy.  Prior to December 1999 the Company was a
development  stage  enterprise  devoted  to  research,  development,  and
commercialization  of  Platinum  Fuel Catalysts (PFC's) and Nitrogen Oxide (NOx)
reduction  technologies  for  diesel engines.  During December 1999, the Company
received  its  EPA registration for its platinum - cerium diesel fuel combustion
catalyst  and  recorded  its  first  commercial  sales for this Platinum Plus(R)
diesel  fuel  catalyst  product.  Accordingly,  in the opinion of management the
Company  was  no  longer  a  development  stage  enterprise.

GOING  CONCERN

     The  financial statements have been prepared assuming that the Company will
continue  as  a  going concern and do not include any adjustments to reflect the
possible  future  effects on the recoverability and classification of assets and
the  amount  and classification of liabilities that may result from the possible
inability  of  the  Company  to  continue  as  a  going  concern.

     Prior  to  2000,  the  Company  was  primarily  engaged  in  research  and
development  and  has  incurred  losses  since  inception  totaling  $18,838,000
(excluding  non-cash  preferred  stock  dividends). The Company expects to incur
losses  through  the  foreseeable  future  as  it  further  pursues  its
commercialization  efforts  and thus is unable to generate a positive cash flow.
The  Company  will require additional capital in the future in order to fund its
operations.  The Company's current cash position, including the $825,000 of ARIS
license  revenue  (see  subsequent  events  for  details),  will fund operations
through  October 2001. Although, the Company believes that it will be successful
in  its  capital  raising efforts, there is no guarantee that it will be able to
raise  such funds on terms that will be satisfactory to the Company. The Company
has  developed  contingency  plans  in  the  event its financing efforts are not
successful.  Such  plans  include reducing expenses and selling or licensing the
Company's  technologies.  Accordingly,  at  March 31, 2001, there is substantial
doubt  as  to  the  Company's  ability  to  continue  as  a  going  concern.

INVENTORIES

     Inventories  are  stated  at  the  lower  of  cost or market and consist of
finished  product.  Cost  is  determined  using  the  first-in, first-out (FIFO)
method.


                                      -6-
<PAGE>
REVENUE  RECOGNITION

     The  Company  recognizes  revenue  from  sales  of Platinum Plus fuel borne
catalyst  and  ARIS  2000  systems  upon  shipment.

     In  February  2000,  the Company completed a license agreement with the RJM
Corporation  for  CDT's  ARIS 2000 NOx control system for all stationary, marine
and  locomotive  applications in North, Central, and South America.  The Company
received  a  $260,000  license  payment in return for transferring the ARIS 2000
technology  to the RJM Corporation.  The company also received $100,000 from the
RJM  Corporation  for  all  of  the  remaining ARIS 2000 inventory.  The license
payment  is  non-refundable  and requires no ongoing services to be performed by
CDT.  Clean Diesel has the opportunity to earn up to an additional $1,040,000 in
aggregate  license  revenue  on the first, second and third anniversaries of the
license  agreement  based  on  prior  years'  ARIS  2000  sales  performance.

NOTES  PAYABLE

     In  November  2000  the  Company arranged a $1,000,000 term loan with three
private  lenders. The term loan has 10% interest rate, is payable in full on May
14,  2002 and can be drawn down in increments of $200,000. The Company drew down
$500,000  in  November  2000  and  the  remaining $500,000 in March of 2001. The
$1,000,000  term  loan is classified as long term on the Company's balance sheet
at  March  31,  2001.

SERIES  A  PREFERRED  STOCK

     During  the  year  ended December 31, 2000 the Company received proceeds of
$1.021  million  through  private  placements  of  1,362  shares of its Series A
Preferred  Stock.  During  the  first  quarter of 2001, $201,500 (403 shares) of
preferred  stock dividends were declared, but unissued.   At March 31, 2001, the
Company had 13,218 shares of Series A Preferred Stock issued and outstanding and
an  additional  1,827  of preferred stock shares issueable for the 2000 and 2001
preferred  stock dividends declared.  As of March 31, 2001 there were earned but
undeclared  dividends  of  approximately  $207,000  (414  shares).

     The  Preferred  Stock has a stated value and liquidation preference of $500
per share plus accrued and unpaid dividends.  Holders of the Preferred Stock are
entitled to receive cash dividends at the annual rate of 9% or dividends in kind
at the annual rate of 11%, when and if declared by the Board of Directors of the
Company  out of funds of the Company legally available therefore. Cash dividends
and  dividends  in  kind are each deemed "Preferred Stock Dividends".  Preferred
Stock  Dividends  are  payable  quarterly  in  arrears.

     In  order  to conserve cash, the Company's Board of Directors has adopted a
resolution that all dividends declared on the Preferred Stock be payable in kind
at the annual rate of 11%.  The dividends will be paid in the form of additional
shares  of  Preferred  Stock  in accordance with the terms and conditions of the
Certificate of Designation on the first business day of January, April, July and
October  to  stockholders  of  record  on  the  first  business day of the prior
December,  March,  June,  and  September.  Dividends  in kind are evidenced by a
stock  certificate  for  full  share  amounts  of such dividends with fractional
amounts  accruing  and  paid  in  full  shares  on  a  subsequent dividend.  The
directors  further  resolved  to issue certificates for stock dividends annually
rather  than  quarterly, unless a stockholder requests certificates to be issued
more  frequently.  These  resolutions will remain in effect until revoked by the
Company's  Board  of  Directors.

     Each  share of the Preferred Stock is convertible into 333.33 shares of the
Company's  Common Stock, which is equivalent to $1.50 per Common Share. Assuming
full  conversion  of  the  Preferred Stock, at March 31, 2001, the Company would
have  approximately  7.67  million  shares of Common Stock outstanding, of which
Fuel  Tech  would  own approximately 1.65 million shares, or a 21.5% interest in
the  Company.


                                      -7-
<PAGE>
     The  Company can force the holder of Preferred Stock to convert its shares,
in  whole  or in part, into Common Stock at any time on, or after, the date that
the  average Closing Price (as defined in the Certificate of Designation) of the
Common  Stock  equals  or  exceeds  $4.50  for 20 consecutive trading days. Such
conversion  may,  at  the  election  of  the  holders  of  60% of the issued and
outstanding  shares  of the Preferred Stock, be scheduled to occur on a pro-rata
basis  quarterly  over  18  months.  The  Preferred Stock shall be automatically
converted  into  Common Stock should the Company consummate a public offering of
its  Common Stock in excess of certain prescribed amounts.  In the event of such
mandatory conversion, accrued and unpaid dividends will also convert into Common
Stock,  on  the  same  terms  as  the  underlying  shares  of  Preferred  Stock.

EARNINGS  PER  SHARE

The Series A preferred stock, stock options and stock purchase warrants were not
included  in  the  computation  of diluted earnings per share because either the
Company  reported  a  loss  for the period or their exercise prices were greater
than  the  average  market  price  of  the  common  stock and therefore would be
antidilutive.

RELATED  PARTY  TRANSACTIONS

     The  Company  has a Management and Services Agreement with Fuel Tech. Under
the  agreement,  the Company pays Fuel Tech a fee equal to an additional 3 - 10%
of  the  costs  paid  on  the Company's behalf, dependent upon the nature of the
costs  incurred.  Currently,  a fee of 3% is assessed on all costs billed to the
Company from Fuel Tech.  Charges to the Company, inclusive of the administrative
fee,  were  approximately  $17,300  and $25,500 in the first quarter of 2001 and
2000,  respectively.

COMMITMENTS

     Effective  October  28, 1994, Fuel Tech granted two licenses to the Company
for  all  patents  and  rights  associated  with  its PFC 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 will pay Fuel Tech a
royalty of 2.5% of its annual gross revenue from sales of the PFCs commencing in
1998.  The  royalty  obligation  expires in 2008.  The Company may terminate the
royalty  obligation  to  Fuel  Tech by payment of $8,727,273 million in 2001 and
declining annually to approximately $1,090,910 in 2008.  The Company as assignee
and  owner  will  maintain  the  technology  at  its  own  expense.  To date, no
royalties  have  been  paid  to  Fuel Tech, although the Company has recorded an
insignificant  accrual  for  royalties  payable  to Fuel Tech at March 31, 2001.

MARKETING  AND  LICENSE  AGREEMENTS

In  March  2001, the Company licensed the Lubrizol Corporation to distribute and
blend the Company's patented Platinum Plus fuel borne catalyst in Europe for use
with  particulate  filters.  The seven year exclusive agreement includes minimum
annual  sales  performance  requirements.

SUBSEQUENT  EVENT

In  April  2001,  the  Company  amended  its  February  2000 ARIS Stationary NOx
Reduction License agreement with the RJM Corporation.  The previous terms of the
RJM  ARIS license agreement provided the Company the opportunity to earn up to a
total  of $1,040,000 in additional ARIS license revenue on the first, second and
third  anniversary  of  the  license  agreement  if RJM's sales exceeded certain
levels.  No  additional  license  revenue  was  earned  or  paid  on  the  first
anniversary  in  February 2001.  Under the amended terms of the RJM ARIS license
agreement,  the  Company will receive $825,000 in  ARIS license revenue, payable
in  two equal $412,500 payments on June 1, 2001 and September 1, 2001 in lieu of
potentially  receiving  $1,040,000  on  the  second  or  third  anniversary.


                                      -8-
<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 Form 10-K for the year ended December 31, 2000.


RESULTS  OF  OPERATIONS

     Prior  to  2000,  the  Company  was  a development stage enterprise and its
efforts  were  devoted  to  the  research,  development and commercialization of
platinum  fuel  catalysts  and  nitrogen  oxide reduction technologies to reduce
emissions  from  diesel engines.  During December 1999, the Company received its
US  EPA registration for its platinum-cerium fuel catalyst product and completed
its  first  commercial  sales.

     Product  sales  and  cost of sales were $24,000 and $7,000 respectively for
the  first  quarter  of  2001  versus $46,000 and $22,000 for 2000.  $13,000 and
$32,000  of Platinum Plus fuel catalyst sales were recorded in the first quarter
of  2001 and 2000 respectively.  Commercial sales of Platinum Plus fuel catalyst
began  in  December  1999  and  the  Company  is  in  the  process of completing
distribution  agreements  with  several  companies.

     Included  in  the  2001  revenue  is $11,000 of royalty income from the RJM
Corporation for the ARIS 2000 NOx reduction technology.  CDT will earn a royalty
on  all future RJM sales of the ARIS 2000 as well as up to $1 million in license
revenue in 2001, 2002, and 2003 depending on the ARIS 2000 sales in those years.

     General  and  administrative  expenses  increased $6,000 to $435,000 in the
first  quarter  2001  versus  $429,000  in  the same period of 2000.  The slight
increase  is  related  to  higher  marketing costs associated with the increased
commercial  activity  of  Platinum  Plus  fuel  catalyst.

     Research  and  development  expenses  decreased  $55,000 to $84,000 in 2001
versus  $139,000 in the comparable period in 2000.  The decrease is attributable
to  the  continued shift from research and development to commercialization that
occurred in 2000.  In addition two engineers transferred from CDT to RJM as part
of  the  ARIS  2000  license  agreement  in  early  2000.

     Patent  filing  expense increased $24,000 to $48,000 in 2001 versus $24,000
in the comparable 2000 period.  The increase is due to the filing of several new
patents  and  maintenance  fees  resulting  from  recently  filed  patents.

     Interest  income  decreased  $7,000  in  2001 to $3,000 from $10,000 in the
comparable  period  in  2000.  This  was a result of a decrease in the amount of
cash  and  cash  equivalents  on  hand  in  first  quarter  of  2001.


                                      -9-
<PAGE>
LIQUIDITY  AND  SOURCES  OF  CAPITAL

     In  December  1999,  the Company received its U.S. EPA registration for its
platinum  -  cerium  fuel  catalyst  product  and  began commercial sales of the
product.  Prior  to  this  time  the Company was a development stage enterprise.
The  Company  has  been  primarily  a  research and development company that has
incurred losses since inception aggregating $18,838,000 (excluding the effect of
non-cash  preferred  stock  dividends).  The  Company  expects  to  incur losses
through  the  foreseeable  future  as  it  further pursues its commercialization
efforts.  The  Company  continues  to  be  dependent  upon  sources  other  than
operations  to  finance  its  working  capital  requirements.

     In  December  1995,  the Company raised approximately $10.5 million, net of
offering expenses and broker-dealer commissions through the 1995 Rights Offering
of  its  shares  by  Fuel Tech.  The Company then repaid Fuel Tech approximately
$2.3  million in inter-company loans.  On February 17, 1998, Fuel Tech agreed to
provide  the  Company with up to $500,000 in order to fund its cash requirements
until  such time as the Company obtained the long-term financing it was seeking.
On  May  20, 1998, the $500,000 commitment was converted into a bridge loan (the
"Bridge  Loan").  The Bridge Loan stipulated an automatic conversion into shares
of  Preferred  Stock  upon  the conclusion of a public or private financing that
contributed  a  minimum  of  $1.75  million  of  additional  net proceeds to the
Company.  In  mid-1998,  the  Company  also  received  an additional $900,000 of
financing under the same Bridge Loan (having the same terms and conditions) from
outside  investors.  As more fully described below, in November 1998, the Bridge
Loan  automatically  converted  into  2,800  shares  of  Preferred  Stock.

     In  1997,  the Company repaid $250,000 of a $745,000 promissory demand note
with  Fuel Tech and restructured the remaining amount into a $495,000 promissory
note  (the  "Term  Note")  with  Platinum Plus, Inc. ("Platinum Plus"), a wholly
owned subsidiary of Fuel Tech.  See below for further information concerning the
exchange  of  the  Term  Note  for  shares  of  the  Company's  Preferred Stock.

     In  November  1998, the Company obtained approximately $1.85 million in net
proceeds  against  the  issuance  of  3,753  shares of Preferred Stock through a
private  placement.  As the Company received net proceeds in excess of the $1.75
million  minimum, and in accordance with the terms of the Bridge Loan agreement,
the  $1.4  million  Bridge Loan, mentioned above, converted into 2,800 shares of
Preferred  Stock.  Additionally,  in  an  effort  to  retain its approximate 27%
interest  in  the  Company  (assuming conversion of the Preferred Stock into the
Company's  Common Shares), Fuel Tech elected to exchange its $495,000 Term Note,
and  $20,000  of associated accrued interest from its Bridge Loan and Term Note,
for  1,029 shares of Preferred Stock.  As a result, Fuel Tech owned 2,029 shares
of  the  Company's  Preferred Stock at December 31, 1998.  These shares plus the
1999  and  2000  quarterly  dividends, if converted, along with its Common Stock
ownership would give Fuel Tech an approximate 21.6% interest in the Company on a
fully  converted  basis  at  December  31,  2000.

     In  August/September  1999,  the  Company  received gross proceeds of $1.75
million,  excluding  expenses  of  $29,000,  from  private investors against the
issuance  of  an additional 3,500 shares of Preferred Stock.  In April 2000, the
Company completed a $1.021 million private placement offering of 1,362 Preferred
shares, excluding $13,833 of expenses.  Therefore, the Company had 13,218 shares
of  Preferred Stock issued and outstanding at December 31, 2000.  As a result of
the  2000  quarterly  dividends  and the January 1, 2001 preferred dividend, the
Company  had an additional 1,827 shares of Preferred Stock issuable upon demand.
At  March  31,  2001,  the  Company  had  a  total  of 15,045 issuable shares of
Preferred  Stock, which are convertible into approximately 5.0 million shares of
the  Company's  Common  Stock,  ($0.05  par  convertible at a rate of 1:333.33).

     The  Company  signed  an  agreement with the RJM Corporation on February 2,
2000  that  licensed  RJM  to  sell  CDT's  ARIS 2000 NOx control system for all
stationary,  marine,  and  locomotive  applications in North, Central, and South
America.  Under  terms of the agreement CDT received an initial $360,000 license
and  inventory  payment  and the opportunity to earn an additional $1,040,000 in
license  revenue  over the next three years based on the performance of the ARIS


                                      -10-
<PAGE>
2000.  In  addition  to  license  revenue, CDT will earn a royalty on all future
ARIS  2000  sales.  In  April  2001,  the Company amended the February 2000 ARIS
Stationary  NOx Reduction License agreement with the RJM Corporation.  Under the
amended  terms  of  the  RJM  ARIS  license  agreement, the Company will receive
$825,000  in  ARIS  license  revenue,  payable in two equal $412,500 payments on
June  1,  2001 and September 1, 2001 in lieu of potentially receiving $1,040,000
on  the  second  or  third  anniversary.

     In June 2000, the Company received a $160,000 payment from Mitsui & Co. Ltd
for  a  short-term  exclusive  license for Platinum Plus fuel borne catalyst and
ARIS  2000 diesel emission reduction technologies.  In addition to the exclusive
license,  Mitsui  &  Co. received an ARIS 2000 system, Platinum Plus product and
diesel  emissions  consulting  services  from CDT.  The Company recognized sales
revenues  for  these  products  when  they  shipped  and the license revenue was
prorated  over  the  six-month  license  period.

     Effective  as  of  October  28, 1994, Fuel Tech granted two licenses to the
Company  for  all  patents and rights associated with its Platinum Fuel Catalyst
("PFC") 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  will  pay  Fuel Tech a royalty of 2.5% of its annual gross revenue from
sales of the PFC's, commencing in 1998.  The royalty obligation expires in 2008.
The  Company  may  terminate  the  royalty obligation to Fuel Tech by payment of
$8,727,273 in 2001 and declining annually to $1,090,910 in 2008.  The Company as
assignee  and owner will maintain the technology at its own expense.  To date no
royalties  have  been  paid  to  Fuel  Tech.

     For  the  three months ended March 31, 2001 and 2000, the Company used cash
of  $489,000  and  $326,000  respectively,  in  operating  activities.

     At  March  31,  2001,  and December 31, 2000, the Company had cash and cash
equivalents  of  $550,000  and $541,000, respectively.  The increase in cash and
cash  equivalents  in  2001  was the result of the draw down of $500,000 from an
existing term loan.  The Company anticipates incurring additional losses through
at  least  2001  as  it  further  pursues  its  commercialization  efforts.

     As  a  result  of the Company's recurring operating losses, the Company has
been  unable  to  generate  a  positive cash flow.  In management's opinion, the
Company's  cash  balance  at March 31, 2001 and the $825,000 of RJM ARIS license
revenue  will  be  sufficient  to  fund the Company's operations through October
2001.  The  Company  will require additional capital to fund its working capital
needs  in  2001  and  2002.  Although  the  Company  believes  that  it  will be
successful in its capital-raising efforts, there is no guarantee that it will be
able to raise such funds on terms that will be satisfactory to the Company.  The
Company  has  developed  contingency plans in the event future financing efforts
are  not  successful.  Such  plans  include  reducing  expenses  and  selling or
licensing  some  of the Company's technologies.  Accordingly, at March 31, 2001,
there  is  substantial  doubt as to the Company's ability to continue as a going
concern.  See  "Liquidity  Going  Concern"  elsewhere  herein  for  additional
information.


                                      -11-
<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


                                      -12-
<PAGE>
                         CLEAN DIESEL TECHNOLOGIES, INC.
                                   SIGNATURES



     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.



                         CLEAN DIESEL TECHNOLOGIES, INC.



Date:  May  1,  2001             By:  /s/  Jeremy  D.  Peter-Hoblyn
                                      ------------------------------------------
                                      Jeremy  D.  Peter-Hoblyn
                                      President and Chief Executive Officer



Date:  May  1,  2001             By:  /s/  David  W.  Whitwell
                                      ------------------------------------------
                                      David  W.  Whitwell
                                      Vice President and Chief Financial Officer


                                      -13-
<PAGE>