UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                            ------------------------

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

                            ------------------------

(Mark One)
[X]  ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934
FOR THE FISCAL YEAR ENDED: DECEMBER 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 No.:  0-27432
                                                -------

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

               DELAWARE                                06-1393453
               --------                                ----------
   (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization                  Identification No.)

                         SUITE 702, 300 ATLANTIC STREET
                               STAMFORD, CT  06901
                   -------------------------------------------
               (Address of principal executive offices) (Zip Code)

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

        Securities registered pursuant to Section 12(b) of the Act:  None

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $0.05 PAR VALUE
                          -----------------------------
                                (Title of Class)

Indicate  by  check  mark  if the registrant is a well-known seasoned issuer, as
defined  in  rule  405  of  the  Securities  Act.  Yes     No X
                                                      ---    ---

Indicate  by  check  mark  if  the  registrant  is  not required to file reports
pursuant  to  Section  13  or  Section  15(d)  of  the  Act.  Yes     No X
                                                                 ---    ---

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  such 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 if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  the  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III  of this Form 10-K or any
amendment  to  this  Form  10-K.

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.
 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
                                          ---    ---

The  aggregate  market  value  of the voting stock held by non-affiliates of the
registrant  based  on  the  last sale price as of June 30, 2006 was $39,177,963.

As  of  March  23,  2007,  the  outstanding number of shares of the registrant's
common  stock,  par  value  $0.05  per  share,  was  31,805,839.

                       DOCUMENTS INCORPORATED BY REFERENCE

None.
================================================================================


<PAGE>
                                EXPLANATORY NOTE

          This Amendment No. 1 on Form 10-K/A amends the Registrant's Annual
Report on Form 10-K, as filed by Clean Diesel Technologies, Inc. ("Clean Diesel
Technologies," "CDT," the "Company," "we," "us," and "our") with the Securities
and Exchange Commission on March 30, 2007 (the "Annual Report"), and is being
filed solely to amend Part III, Item 10 through Item 14 of the Annual Report.
The reference on the cover of the Annual Report to the incorporation by
reference of our Definitive Proxy Statement into Part III of the Annual Report
is hereby amended to delete that reference.

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

ITEM
NUMBER  DESCRIPTION                                                                 PAGE
------  --------------------------------------------------------------------------  ----
<S>     <C>                                                                         <C>
                                   PART III

   10.  Directors, Executive Officers and Corporate Governance                         3
   11.  Executive Compensation                                                         5
   12.  Security Ownership of Certain Beneficial Owners and Management and Related
        Stockholder Matters                                                           15
   13.  Certain Relationships and Related Transactions, and Director Independence     16
   14.  Principal Accountant Fees and Services                                        17
        Signatures                                                                    18
</TABLE>


                                       2
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The following table sets forth the name, age and position of the Directors
and Executive Officers of Clean Diesel Technologies, Inc.

<TABLE>
<CAPTION>
Name                  Age   Position
----                  ---   --------
<S>                   <C>   <C>

John A. de Havilland   69   Director
Derek R. Gray          73   Chairman of the Board of Directors
Charles W. Grinnell    70   Director and Corporate Secretary
John J. McCloy II      69   Director
David F. Merrion       70   Director
Bernhard Steiner       58   Director, President and Chief Executive Officer
R. Glen Reid           60   Vice President - Sales and Marketing
Timothy Rogers         45   Executive Vice President - International Operations
Ann B. Ruple           55   Vice President, Treasurer and Chief Financial Officer
Walter G. Copan        53   Executive Vice President - North American Operations and Chief
                            Technology Officer
</TABLE>

     JOHN A. DE HAVILLAND has been a director of Clean Diesel Technologies since
its inception.  Mr. de Havilland was a director of J. Henry Schroder Wagg & Co.
Ltd., a merchant bank, from 1972 until his retirement in 1989.  Except for the
period of April through December 1998, Mr. de Havilland was a Managing Director
of Fuel-Tech N.V., (now Fuel Tech, Inc.) a pollution control company, from 1987
through March 1, 2002.

     DEREK R. GRAY has been a director of Clean Diesel Technologies since 1998.
Mr. Gray has been Managing Director of S G Associates Limited, a United Kingdom
fiscal advisory firm since 1971 and a director of Velcro Industries N.V., a
manufacturing company, since 1974.

     CHARLES W. GRINNELL has been Vice President, General Counsel and Corporate
Secretary of Clean Diesel Technologies since its inception and has held the same
positions with Fuel Tech, Inc. since 1987.  Mr. Grinnell, a director of Fuel
Tech, Inc., is engaged in the private practice of corporate law in Stamford,
Connecticut.

     JOHN J. MCCLOY II has been a director of Clean Diesel Technologies since
June 2005. He is a private investor concentrating on venture capital and early
stage investment projects in a variety of industries. He is Chairman of Gravitas
Technology, Inc., an information technology company; the Sound Shore Mutual
Fund, Inc.; Ashland Management, Inc., an investment advisory firm; the American
Council on Germany; and a member of the U.S. Council on Foreign Relations. He
was also a director of NCT Group, Inc. from 1986 to February 2007.

     DAVID F. MERRION has been a director of Clean Diesel Technologies since
June 2006 and Chairman of the Clean Diesel Technologies Technical Advisory Board
since January 10, 2005.  He is the principal of David F. Merrion LLC, a
consulting practice.  Mr. Merrion is a retired Executive Vice President -
Engineering of Detroit Diesel Corporation, his employer from 1988 to 1999.  He
has been a director of Catalytica Energy Systems, Inc., a catalytic research and
development company since 2004 and a director of Greenvision Technology, LLC, an
intellectual property holding company, since 2000.

     DR. BERNHARD STEINER became Chief Executive Officer of Clean Diesel
Technologies on September 14, 2004 and President on January 25, 2006.  Dr.
Steiner held Executive Director positions from 2003 at both Wayfinder Systems AB
of Sweden, a navigation and location software development company, and OWR AG, a
leading nuclear, biological and chemical protection solutions company.  He
continues as a non-executive director at both companies.  From 1999 until 2003,
Dr. Steiner was General Manager of the Software Solutions Group of Motorola,
Inc., an electronics company.  From 1994 until 1999, he was Chairman and Chief
Executive of the NXT PLC Group companies Wharfedale and Mission and from 1996,
Group Managing Director of NXT PLC.  Dr. Steiner, a graduate of the University
of St. Gallen, Switzerland, has also during his business career held executive
sales and marketing positions at Canon, Sony and Amstrad PLC.


                                       3
<PAGE>
     R. GLEN REID has been Vice President - Sales and Marketing of Clean Diesel
Technologies since April 18, 2003 and an employee of Clean Diesel Technologies
since 2002.  From 1999 to 2002, Mr. Reid was Vice President - Sales and
Marketing of Marathon Sensors, Inc., a manufacturer of sensors and associated
instrumentation.

     TIMOTHY ROGERS has been Executive Vice President - International Operations
since January 25, 2006; had been Vice President - International of Clean Diesel
Technologies since February 21, 2004; and had been a consultant to Clean Diesel
Technologies since September 30, 2003.  From 2002 to September 2003, he was
Director of Sales and Marketing of ADAS Consulting, Ltd. and from 1993 to 2002,
was a Director of Adastra, a wholly owned-subsidiary of Associated Octel
Company, Ltd, a U.K.-based multinational Petrochemical Company.

     ANN B. RUPLE has been Vice President, Treasurer and Chief Financial Officer
of Clean Diesel Technologies since December 13, 2006.  Previously she had been
Director, Financial Reporting, Planning and Analysis of NCT Group, Inc., a
technology company, her employer since 1998.  Ms. Ruple is a Certified Public
Accountant and holds an MBA degree.

     DR. WALTER G. COPAN has been Executive Vice President - North American
Operations & Chief Technology Officer of Clean Diesel Technologies since January
25, 2006; and he had been Vice President and Chief Technology Officer from
August 3, 2005 when he joined Clean Diesel Technologies.  Previously, Dr. Copan
had been Principal Licensing Executive, Technology Transfer, of the National
Renewable Energy Laboratory of the U.S. Department of Energy since June 2003;
and before that had been Managing Director, Technology Transfer and Licensing of
The Lubrizol Corporation, a fuel additive company, his employer since 1975.

     There are no family relationships among any of the director nominees or
executive officers. Please also see Item 13, "Certain Relationships and Related
Transactions, and Director Independence."

CORPORATE GOVERNANCE

     The Audit Committee

     The Audit Committee is responsible for review of audits, financial
reporting and compliance, and accounting and internal controls policy.  For
audit services, the Audit Committee is responsible for the engagement and
compensation of independent auditors, oversight of their activities and
evaluation of their independence.  The members of Audit Committee are Messrs.
Gray, McCloy and Merrion.

     In the opinion of the Board, each of the voting members of the Audit
Committee has both business experience and an understanding of generally
accepted accounting principles and financial statements enabling them to
effectively discharge their responsibilities as members of that Committee.
Moreover, the Board has determined that Mr. Gray is a financial expert within
the meaning of Securities and Exchange Commission regulations.  In making this
determination the Board considered Mr. Gray's formal training, and long
experience in accounting and auditing and his former service for many years as
the Chairman of the Audit Committee of another reporting company under the
Securities Exchange Act.

     Code of Business Ethics and Conduct

     On the recommendation of the Audit Committee, the Board has adopted a Code
of Business Ethics and Conduct applicable to all of our officers and which is
available for viewing on the Clean Diesel Technologies web site <www.cdti.com>.
Changes to or waivers of the requirements of the Code will be posted to the web
site and reflected in appropriate Securities and Exchange Commission filings.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Based on filings with the Securities and Exchange Commission, we believe
that all our officers and directors were in compliance with 2006 filing
requirements relating to beneficial ownership reports under Section 16(a) of the
Securities Exchange Act of 1934, except that the following filings were delayed,
each filing relating to a single transaction:  The Form 3 due for Mr. Merrion on
June 19, 2006 was filed on November 15, 2006; the Forms 4 due for


                                       4
<PAGE>
Messrs. de Havilland and Gray on January 2, 2007 were filed January 10, 2007;
the Form 4 due for Mr. Copan on January 2, 2007 was filed January 9, 2007.

ITEM 11.  EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

     The Compensation and Nominating Committee has reviewed and discussed with
Management the Compensation Discussion and Analysis which appears immediately
below in this annual report on Form 10-K.  Based on this review and discussion,
the Committee has recommended to the Board that the Compensation Discussion and
Analysis be included in this annual report on Form 10-K.

By the Compensation and Nominating Committee
John de Havilland, Chairman, John J. McCloy II and David F. Merrion

     The information contained in the foregoing report shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall the information be incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the company specifically incorporates it by reference
in a filing.

-------------------------------------------------------------------------------

COMPENSATION DISCUSSION AND ANALYSIS

     Compensation Program Objectives

     We develop, design, market and license patented technologies and solutions
that reduce harmful emissions from internal combustion engines, while
simultaneously improving fuel economy and engine power.  Continued investment in
and protection of our intellectual property as well as intensive marketing and
commercializing of our products to increase revenue are fundamental to us.  We
are committed to ensuring our growth and maximizing stockholder value.  To that
end, we have concentrated our efforts on enhancing our core technologies,
building innovative product and service offerings, and promoting our expanding
brand portfolio.  Thus, our compensation programs are designed to enable us to
achieve the following objectives:

     -    to ensure that we remain as a market leader in the development of
          innovative, technical solutions;
     -    to attract, engage and retain top talent that ensures the achievement
          of business goals, strategies and objectives;
     -    to support an integrated team-oriented philosophy; and
     -    to provide stockholders with a superior rate of return.

     Compensation Elements

     Our executive compensation program has as a primary purpose our need to
attract, retain and motivate the highly trained, experienced individuals whose
technical expertise and business talents will enable us to succeed.  The key
components of that program during the last fiscal year were base salary, annual
bonus awards and long-term incentives, as follows.

     Base Salary

     Executive base salaries are approved by the Compensation and Nominating
Committee on recommendation of the Chief Executive Officer, except that the base
salary of the Chief Executive Officer is fixed by the Committee itself.  In
approving or fixing base salaries, the Committee acts in its collective business
judgment and experience on what it understands to be fair, reasonable and
equitable compensation in view of our requirements for recruiting and retention
in a highly competitive market.  In its deliberations, the Committee considers:

     -    the executive's compensation relative to other officers;
     -    recent and expected performance of the executive;


                                       5
<PAGE>
     -    our recent and expected overall performance; and
     -    our overall budget for base salary increases.

     In 2006, in an effort to control costs, we implemented a salary reduction
program for our managers that reduced 2006 payroll expense by $101,000.  The
salary reductions for individuals were linked to the 2006 performance targets
established for the 2006 cash bonus program described below.

     Annual Bonus Awards

     In 2006, potential cash awards under our incentive cash bonus program,
called the Management Incentive Program ("MIP"), were designed to focus our
managers on the achievement of Company financial targets for that year, as well
as on individual objectives established at the commencement of the year.

     The 2006 MIP was structured as follows:

     -    Participation in the incentive program was limited to managers.

     -    For every dollar of salary reduction under the salary reduction
          program described above, the participant would have the opportunity to
          recover that reduction by a cash bonus payable on the attainment of
          progress toward the U.S. and International sales goals for 2006. 25%
          of the bonus could be earned by meeting thresholds within the sales
          targets and the balance on meeting personal goals agreed by the
          relevant manager and approved by the Chief Executive Officer. Reduced
          salaries could be made good on attaining 65% of targets, another
          incremental amount almost equal to the salary reduction could be
          earned, if the revenue targets are attained, and, if revenues were to
          reach 150% of the target, an amount approaching three times the salary
          reduction could be earned.

     -    In 2006, the financial metrics set for that year's bonus program were
          not achieved, and, accordingly, awards were not made to participants
          in the MIP. A limited number of employees, however, did receive cash
          bonuses awarded in the Committee's business judgment on an individual
          performance basis, principally related to our success in the 2006 fund
          raising effort and also with respect to individual efforts related to
          our technologies. The individual performance awards to the Named
          Executive Officers are set out in the "Bonus" column of the Summary
          Compensation Table below. The Committee's approval of specific bonus
          payments to individual employees was based on several considerations,
          including the employee's base salary and specific identifiable
          achievements. The 2006 bonus for Dr. Steiner was principally based on
          the Committee's evaluation of the value to Clean Diesel Technologies
          arising from Dr. Steiner's efforts in the 2006 fund raising program.

     Long-Term Incentives

     We have one equity based employee compensation plan, referred to as the
1994 Incentive Plan, approved by the stockholders in 1994 and in 2002, under
which awards may be granted to participants in the form of non-qualified stock
options, incentive stock options, stock appreciation rights, restricted stock,
performance awards, bonuses or other forms of share-based or non-share-based
awards or combinations thereof.  Participants in the 1994 Incentive Plan may be
our directors, officers, employees, consultants or advisors (except consultants
or advisors in capital-raising transactions) as the directors determine are key
to the success of our business.

     Our long-term equity incentives are stock options and are designed to focus
management on the long-term success of the Company as evidenced by appreciation
of the Company's stock price over several years, by growth in its earnings per
share and other elements, and thereby, to align the interests of the optionees
with the interests of the stockholders.

     Details concerning stock options awarded in 2006 to the Named Executive
Officers and to the directors are set out in the Summary Compensation Table and
the Grants of Plan-Based Awards Table below.


                                       6
<PAGE>
     Management and Committee Compensation Actions for 2006

     On December 19, 2005, the Chief Executive Officer proposed to the
Compensation and Nominating Committee certain base salary decreases in 2006 for
management employees.  In an executive session following that meeting the
Committee independently fixed the 2006 salary of the Chief Executive Officer
and, with several adjustments, approved the proposed salary reductions for other
employees.  Also at the same meeting the Committee approved of the Management
Incentive Program for 2006 described above.

     On December 15, 2006, the Committee received the Chief Executive Officer's
recommendations for stock option awards to current employees and, then, deferred
action until later in 2007 until after the closing of the fund raising
activities then being conducted.  On January 4, 2007, the Committee recommended
and the Board awarded stock options to acquire 625,000 shares of which 490,000
were awarded to management and other employees, 10,000 to an outside consultant
and 125,000 to the non-executive directors.

     Ownership Guidelines

     We do not have a stock ownership policy for Senior Executives.

     Hedging and Insider Trading Policies

     We do not have a formal policy on hedging.  We prohibit trading in our
securities during closed periods which are the two months before the release of
annual results and one month before the release of quarterly results.

     Equity Grant Practices

     Under the 1994 Incentive Plan, the Board grants stock option awards for a
term of not more than ten years.  Stock option awards are made by the full Board
rather than the Compensation and Nominating Committee because the non-executive
directors themselves are eligible for discretionary stock option awards.  The
awards have an exercise price per share equal to fair market value on the grant
date.  Fair market value is the mean of the high and low trading price, or if
there are not trading prices, the bid and asked prices, reported in either case
on both the Alternative Investment Market of the London Stock Exchange and the
Over the Counter Bulletin Board.  The grant date is the date of Board action but
may be a future date tied to an event, such as commencement of employment.
Under the current policy of the Board, awards to employees may be exercised
one-third on the grant date and one-third on each of the first and second
anniversaries of the grant date; option awards may in the discretion of the
Board be Incentive Stock Options under Internal Revenue Code Section 422, if
awarded to U.S. employees; on resignation, those options which may then be
exercised continue to be exercisable for time periods depending on length of
employment, so that such options are exercisable for 180 days, if employed less
than three years; for two years, if employed for between three and five years;
for three years, if employed between five and seven years; for five years if
employed more than seven years; but in no event later than the basic ten year
option term.  In case of death, total disability or normal retirement, the
portion of the option then vested shall continue in force and be exercisable
until the expiration of the basic ten year term, but the then unvested portion
of the option shall terminate and be of no effect.

     Retirement Benefits

     We have no defined benefit pension plan.  We have a 401(k) Plan covering
substantially all employees.  The 401(k) Plan is an important factor in
attracting and retaining employees as it provides an opportunity to accumulate
retirement funds.  Our 401(k) Plan provides for annual deferral of up to $15,500
for individuals until age 50, $20,500 for individuals 50 and older, or, as
allowed by the Internal Revenue Code.  We match 100% of employee contributions
up to 4% of employee salary.  Matching contributions vest immediately.

     Welfare Benefits

     In order to attract and retain employees, we provide certain welfare
benefit plans to its employees, which include medical and dental insurance
benefits.  We may also provide other benefits to executives including group term
life insurance and disability insurance.  These benefits are not provided to
non-employee directors.


                                       7
<PAGE>
     Employment Agreements; Severance Arrangements

     Each of the "Named Executive Officers," identified below in the Summary
Compensation Table, is party to our form of employment agreement with similar
provisions.  These agreements are for indefinite terms except for Dr. Steiner
whose agreement expires September 13, 2008.  These agreements provide for
severance benefits.  The severance benefit is payable in the event of
termination of employment because of physical incapacity or without cause.
Termination of employment without cause is termination under circumstances other
than resignation, retirement or cause and includes constructive discharge.
Termination for cause, for which no severance is payable, is termination on
account of conviction or plea of guilty to a felony, any instance of fraud,
embezzlement, self dealing, insider trading or similar malfeasance with respect
to the Company regardless of amount, substance or alcohol abuse, or other
conduct for which dismissal has been identified by us in writing as a potential
disciplinary measure.

     The severance benefit for incapacity for each of the officers is in the
form of base salary for six months.  The severance benefit for termination
without cause is base salary and benefit continuation for varying time periods
depending on the employee or until the employee finds comparable employment.
Benefit continuation includes health and medical insurance, life insurance,
401(k) Plan match, and the employer's portion of social security.  The time
periods and estimated cash value of benefits are:  for Dr. Steiner, six months
($153,000) or the remaining amount of his agreement, if less; for Ms. Ruple, six
months ($77,500); for Dr. Copan, one year ($200,000); for Mr. Rogers, three
months ($63,500); for Mr. Reid, six months ($82,200).  The value of these
estimated severance benefits is based on the amount of base salary and benefits
payable from January 1, 2007 for the applicable time period.

     Under the several employment agreements, each of the officers is
indefinitely obligated to maintain confidentiality of our proprietary
information and to assign inventions made in the course of employment by us.
Also, for two years after termination, the officers are required to report to us
the nature of any employment.  Severance benefits are not explicitly conditioned
on these undertakings.

     Options Vesting on Change in Control

     Under the 1994 Incentive Plan, all outstanding options shown in the table
below "Outstanding Equity Awards at Fiscal Year-End" for the Named Executive
Officers will become immediately exercisable in the event that there is with
respect to us, a "Change in Control."  A "Change in Control" takes place if (a)
any person or affiliated group becomes the beneficial owner of 51% or more of
our outstanding securities; (b) in any two year period, persons in the majority
of the board of directors cease being so unless the nomination of the new
directors was approved by the former directors when they were in office; ( c) a
business combination takes place where our shares are converted to cash,
securities or other property, but not in a transaction in which our stockholders
have proportionately the same share ownership before and after the transaction;
or (d) our stockholders approve of a plan for our liquidation or dissolution.

     Indemnification and Insurance

     Under our Certificate of Incorporation, indemnification is afforded our
directors and executive officers to the fullest extent permitted by Delaware
law.  Such indemnification also includes payment of any costs which an
indemnitee incurs because of claims against the indemnitee and provides for
advancement to the indemnitee of those costs, including legal fees.  We are,
however, not obligated to provide indemnity and costs where it is adjudicated
that the indemnitee did not act in good faith in the reasonable belief that the
indemnitee's actions were in our best interests, or, in the case of a settlement
of a claim, such determination is made by our Board of Directors.

     We carry insurance providing indemnification, under certain circumstances,
to all of its subsidiaries' directors and officers for claims against them by
reason of, among other things, any act or failure to act in their capacities as
directors or officers.  The current annual premium for this policy is $61,000.

     No payments have been made to any of our past or present directors or
officers for such indemnification or under any insurance policy.


                                       8
<PAGE>
     Compensation Recovery Policies

     We maintain a policy that we will evaluate in appropriate circumstances
whether to seek the reimbursement of certain compensation awards paid to an
executive officer, if such executive engages in misconduct that caused or
partially caused a restatement of our financial results, in accordance with
section 304 of the Sarbanes-Oxley Act of 2002.  If circumstances warrant, we
will seek to recover appropriate portions of the executive officer's
compensation for the relevant period, as provided by law.

     Tax Deductibility of Executive Compensation

     We review and consider the deductibility of executive compensation under
the requirements of Internal Revenue Code Section 162(m), which provides that we
may not deduct compensation of more than $1,000,000 that is paid to certain
individuals.  We believe that compensation paid under our incentive plans is
generally fully deductible for federal income tax purposes.

     Accounting for Equity-Based Compensation

     On January 1, 2006, we began accounting for the equity-based compensation
issued under the Incentive Plan in accordance with the requirements of FASB
Statement of Financial Accounting Standards No. 123(R), "Share-based Payment."

                           SUMMARY COMPENSATION TABLE

     The table below sets forth information concerning fiscal year 2006
compensation for the "Named Executive Officers" in all capacities awarded to,
earned by or paid to Dr. Bernard Steiner, President and Chief Executive Officer;
Ann B. Ruple, CPA, Vice President, Treasurer and Chief Financial Officer; Dr.
Walter G. Copan, Executive Vice President North America and Chief Technical
Officer; Timothy Rogers, Executive Vice President, International; R. Glen Reid,
Vice President Sales and Marketing.  Also included is information for James M.
Valentine, former President and Chief Operating Officer; and for David W.
Whitwell, former Senior Vice President - Administration, Treasurer and Chief
Financial Officer, both of whom were in office for a portion of the year 2006.


                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                                          Non-Equity
                                                              Option    Incentive Plan     All Other
Name and Principal                                  Bonus     Awards     Compensation     Compensation
Position                         Year    Salary      (4)       (5)         ($) (4)            (6)          Total
-------------------------------  -----  ---------  --------  --------  ----------------  --------------  ---------
       (a)                        (b)      (c)       (d)       (e)           (f)              (g)           (h)
<S>                              <C>    <C>        <C>       <C>       <C>               <C>             <C>
Bernhard Steiner                  2006  $ 222,172  $67,585   $     -   $             -   $      66,269   $ 356,026
President and
Chief Executive Officer

Ann B. Ruple (1)                  2006  $   8,247  $     -   $73,888   $             -   $           -   $  82,135
Vice President, Treasurer
and Chief Financial Officer

Walter G. Copan                   2006  $ 195,000  $25,000   $     -   $             -   $      27,446   $ 247,446
Executive Vice President
North America and Chief
Technical Officer

Timothy Rogers                    2006  $ 227,096  $19,643   $     -   $             -   $           -   $ 246,739
Executive Vice President
International

R. Glen Reid                      2006  $ 163,797  $     -   $     -   $             -   $      27,304   $ 191,101
Vice President
Sales and Marketing

James M. Valentine (2)            2006  $  17,263  $     -   $     -   $             -   $     357,475   $ 374,738
Former President and
Chief Operating Officer

David W. Whitwell (3)             2006  $ 174,137  $     -   $     -   $             -   $      25,703   $ 199,840
Former Senior Vice President -
Administration,
Treasurer and Chief
Financial Officer
</TABLE>


(1)  Ms. Ruple commenced employment on December 13, 2006.

(2)  Mr. Valentine resigned on January 19, 2006 and, based on legal advice, he
was entitled to base salary and benefits continuation for one year or until he
obtained comparable employment.  Thus, Mr. Valentine's salary to his resignation
date is reflected in column (c) and his salary and benefits continuation
thereafter is reflected in column (g).

(3)  Mr. Whitwell resigned effective November 13, 2006.  No severance payments
were due to Mr. Whitwell following his resignation.

(4)  Bonus payments were for personal performance.  No incentive awards were
earned under the 2006 Incentive Plan.  The salary and bonus payments to Dr.
Steiner and Mr. Rogers were paid in euros and sterling, respectively, and were
valued by the dollar conversion rate for those currencies as reported in the
Wall Street Journal with respect to banking transactions of $1 million or more
as of the date accrued.

(5)  The option award was 50,000 shares on December 13, 2006 to Ms. Ruple and
does not represent cash paid to the optionee.  The dollar amounts reflect the
aggregate grant fair date value in accordance with SFAS No. 123R.  The
methodology of and all assumptions made in the valuation of these option awards
are disclosed in Note 7 to Clean Diesel Technologies' Consolidated Financial
Statements for the fiscal year 2006.

(6)  "All Other Compensation" includes salary continuation, 401K match, life
insurance premiums, disability insurance premiums, medical and dental insurance
premiums, and, for Dr. Steiner, includes  50,000 ($67,585) pursuant to his
employment agreement as cash in lieu of medical and retirement plan benefits.


                                       10
<PAGE>
                           GRANTS OF PLAN-BASED AWARDS

     The following table sets out information relating to grants of plan-based
awards to the named executive officers in the fiscal year 2006.

<TABLE>
<CAPTION>
                                                                          All Other                                Grant
                                                                           Option                                Date Fair
                                         Estimated Future Payouts          Awards:     Exercise                  Value of
                                             Under Non-Equity             Number of     or Base      Closing       Stock
                                          Incentive Plan Awards          Securities    Price of       Price         and
                                  -------------------------------------  Underlying     Option       Date of      Option
             Grant      Meeting    Threshold     Target       Maximum    Options (2)  Awards (3)      Grant       Awards
  Name      Date (1)     Date         ($)          ($)          ($)          (#)          ($)          ($)          ($)
---------  ----------  ---------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>        <C>         <C>        <C>          <C>          <C>          <C>          <C>          <C>          <C>

Bernhard
Steiner        -       12/19/05     $28,666     $172,000     $257,999         -            -            -            -

Ann B.
Ruple       12/13/06   11/25/06        -            -            -         50,000        $1.65        $1.62       $73,888

Walter G.
Copan          -       12/19/05     13,332       80,000       119,988         -            -            -            -

Timothy
Rogers         -       12/19/05     18,509       49,356       74,118          -            -            -            -

R. Glen
Reid           -       12/19/05      6,489       17,305       25,957          -            -            -            -

James M.
Valentine      -       12/19/05        -            -            -            -            -            -            -

David W.
Whitwell       -       12/19/05      7,382       44,290       66,436          -            -            -            -
</TABLE>

(1) The Board met to grant the option to Ms. Ruple on November 25, 2006 but to
take effect and to be priced on her first date of employment so that the grant
date was December 13, 2006

(2) Under the current policy of the Board, employee options are granted for a
ten year term to vest one third immediately and one third on each of the first
and second anniversaries of grant.  The option award to Ms. Ruple was an
incentive stock option.  With the exception of this award, no stock option
awards were made in 2006 to employees or officers.

(3) Our options are valued for exercise price purposes at the mean of the high
and low trading prices or, if none, bid and asked prices, as reported on the
Alternative Investment Market (U.K.) and the Over the Counter Bulletin Board
(U.S.) on the grant date.

                        OPTION EXERCISES AND STOCK VESTED

     There were no exercises of stock options or vesting of stock with respect
to Named Executive Officers during the 2006 fiscal year.


                                       11
<PAGE>
                OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (1)

     The following table sets out information as to the Named Executive Officers
concerning their unexercised options awards, by award outstanding at fiscal 2006
year-end.

<TABLE>
<CAPTION>
                       Number of       Number of
                       Securities      Securities
                       Underlying      Underlying
                      Unexercised     Unexercised
                        Options         Options          Option           Option
                           #               #            Exercise        Expiration
       Name           Exercisable    Unexercisable        Price            Date
-------------------  --------------  --------------  ---------------  --------------
       (a)                (b)             (c)              (d)             (e)
<S>                  <C>             <C>             <C>              <C>
Bernard Steiner             150,000               -  $          1.84        09/13/14
                             50,000               -             1.94        12/09/14
                             66,667          33,333             1.02        12/20/15

Ann B. Ruple                 16,667          33,333  $          1.65        12/13/16

Walter G. Copan              25,000          75,000  $         1.391        08/03/15
                             33,000          16,667            1.020        12/20/15

Timothy G. Rogers           100,000               -  $          1.95        09/30/13
                             20,000               -             1.94        12/09/14
                             33,333          16,667             1.02        12/20/15

R. Glen Reid                 50,000               -  $          3.30        04/23/12
                             40,000               -             1.65        06/11/13
                             20,000               -             3.07        12/02/13
                             20,000               -             1.94        12/09/14
                             11,333           5,667             1.02        12/20/15

James M. Valentine           42,500               -  $         4.625        02/06/07
                             29,885               -              .90        06/14/09
                             75,000               -             2.50        02/10/10
                             60,000               -            1.965        03/14/11
                            100,000               -             2.90        03/13/12
                             80,000               -             1.65        06/11/13
                             40,000               -             3.07        12/02/13
                             30,000               -             1.94        12/09/14
                              8,889               -             1.02        12/20/15

David W. Whitwell            60,000               -  $         2.375        11/10/09
                             40,000               -            1.965        03/14/11
                             80,000               -             2.90        03/13/12
                             44,552               -             1.65        06/11/13
                             31,000               -             3.07        12/02/13
                             20,000               -             1.94        12/09/14
                             33,333               -             1.02        12/20/15
</TABLE>

(1)  The option expiration date indicated above is the tenth anniversary of the
date of grant. Each of the foregoing options is for a ten year term and vests as
to the shares granted, one third on grant and one third on the first and one
third on the second anniversaries of grant. On resignation, those of the above
options which have not expired may continue to be exercisable for time periods
depending on length of employment, so that such options are exercisable for 180
days, if employed less than three years; for two years, if employed for between
three and five years; for three years, if


                                       12
<PAGE>
employed between five and seven years; for five years if employed more than
seven years; but in no event later than the basic ten year option term.  In case
of death, total disability or normal retirement, the portion of the option then
vested shall continue in force and be exercisable until the expiration of the
basic ten year term, but the then unvested portion of the option shall terminate
and be of no effect.

                              DIRECTOR COMPENSATION

     In 2006, our directors were paid an annual retainer of $30,000. The
Chairman of the Board and the Chairman of the Audit Committee received,
respectively, an additional annual retainer of $30,000 and $10,000. Retainers
were paid quarterly in arrears. There are no meeting fees. The retainers may, at
the director's election be paid in the form of restricted stock valued at the
average of the high and low trading prices in each quarter. Directors are also
eligible for stock option awards. Stock option awards to non-executive directors
are, under the current policy of the Board, for a ten year term and are fully
vested when granted. Directors who are also our employees or executive officers
receive no compensation for their service as directors as such, and accordingly,
Messrs. Grinnell and Steiner are not included in the table.

                       SUMMARY DIRECTOR COMPENSATION TABLE

     The following table shows for our non-executive directors all compensation
earned in 2006 on account of fees, whether paid in cash or stock, and stock
option awards.

<TABLE>
<CAPTION>
                           Fees Earned
                                Or
                           Paid in Cash    Option Awards    Total
              Name           ($) (1)          ($) (2)        ($)
     -------------------  --------------  ---------------  --------
              (a)              (b)              (d)          (e)
<S>                       <C>             <C>              <C>
     J. A. de Havilland   $   30,000 (1)  $            -   $ 30,000

     D. R. Gray               70,000 (1)               -     70,000

     J. J. McCloy II          30,000                   -     30,000

     D. F. Merrion            13,750              82,843     96,593
</TABLE>

     (1) Of these fee amounts, Messrs. de Havilland and Gray, respectively,
     accepted payments for $15,000 in the form of 11,180 shares and for
     $70,000 in the form of 52,174 shares. These shares which were valued
     at the high and low trading prices over the quarter in which the fees
     were earned, are not deferred compensation and, having been purchased,
     are not stock awards.

     (2) No stock options were awarded in 2006 to the directors, except to
     Mr. Merrion. The value shown for Mr. Merrion's option was calculated
     in accordance with SFAS No. 123(R) and does not represent cash paid to
     the optionee.

                                       13
<PAGE>
         DIRECTORS OUTSTANDING STOCK OPTIONS AT 2006 FISCAL YEAR END (1)

     The following table sets out by grant date the outstanding options held at
year end 2006 by the directors. All of these options are vested.

<TABLE>
<CAPTION>
                                Number of
                                Securities
                                Underlying
                               Unexercised     Option      Option
                                 Options      Exercise   Expiration
             Name                   #          Price        Date
     ------------------------  ------------  ----------  -----------
             (a)                   (b)          (c)          (d)
<S>                            <C>           <C>         <C>
     John A. de Havilland (1)        10,000  $     0.90     06/14/09
                                     10,000  $     2.50     02/10/10
                                     10,000  $    1.965     03/14/11
                                     25,000  $     2.90     03/13/12
                                     20,000  $     1.65     06/11/13
                                     10,000  $     3.07     12/02/13
                                     15,000  $     1.94     12/09/14
                                     15,000  $     1.02     12/20/15
                                     25,000  $     1.82     01/04/17

     Derek R. Gray (1)               10,000  $     0.90     06/14/09
                                     10,000  $     2.50     02/10/10
                                     10,000  $    1.965     03/14/11
                                     25,000  $     2.90     03/13/12
                                     35,000  $     1.65     06/11/13
                                     20,000  $     3.07     12/02/13
                                     25,000  $     1.94     12/09/14
                                     15,000  $     1.02     12/20/15
                                     50,000  $     1.82     01/04/17

     John J. McCloy II               50,000  $    1.575     06/09/15
                                     15,000  $     1.02     12/20/15
                                     25,000  $     1.82     01/04/17

     David F. Merrion                55,000  $    1.675     11/13/16
                                     25,000  $     1.82     01/04/17
</TABLE>

     (1) Excludes non-compensatory warrants issued in conjunction with
     investment transactions consummated by this director (see
     footnote 2 to the table, "Principal Stockholders and Stock
     Ownership of Management"). Each of these options is for a ten
     year term and was fully vested on date of grant.

     Compensation & Nominating Committee Interlocks and Insider Participation

     There were no Compensation and Nominating Committee interlocks or insider,
i.e. employee, participation during 2006.


                                       14
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDERS MATTERS

     The following table sets forth information known to us regarding the
beneficial ownership of common stock as of March 31, 2007 by (i) each person
owning beneficially more than three percent(4) of the outstanding common; (ii)
each of our directors or director nominee; (iii) the Named Executive Officers;
and (iv) all directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                              PERCENTAGE
                                                 NO. OF      BENEFICIALLY
NAME AND ADDRESS(1)                           SHARES (2)(3)    OWNED(4)
--------------------------------------------  -------------  -------------
<S>                                           <C>            <C>
Beneficial Owner

Channel Hotels and Properties Limited (3)         1,613,192           5.0%
Udaset Holdings Limited                           1,294,073           4.0%
Kanis SA                                          1,668,855           5.2%
Trustees of Cadogan Family Settlement (3)(5)      1,558,278           4.6%
Positive Securities Limited (3)                   1,407,718           4.4%
Fuel Tech, Inc..(2)(3)                            1,850,119           5.7%
Waltham Forest Friendly Society (2)(3)            1,724,463           5.4%
Ruffer LLP (3)                                    3,325,860          10.1%
Hawkwood Fund Management (3)                      2,256,480           6.9%
Duckworth Esq.                                    2,000,000           6.2%
Ram Ltd.                                          1,109,003           3.4%
Avenir Finances S.A.                              1,578,868           4.8%

Directors, Nominees and
Named Executive Officers

Walter G. Copan (2)                                 112,354             *
John A. de Havilland (2)                            274,761             *
Derek R. Gray (2)                                   998,502           3.1%
Charles W. Grinnell (2)                             249,408             *
John J. McCloy II (2)                               123,536             *
David Merrion (2)                                    80,000             *
R. Glen Reid (2)                                    144,666             *
Timothy Rogers (2)                                  207,408             *
Bernhard Steiner (2)                                500,454           1.5%
Ann B. Ruple (2)                                     28,083             *

All Directors and Officers
as a Group (10 persons) (2)                       2,692,172           7.9%
</TABLE>

* Less than 1%

(1)  The address of Channel Hotels and Properties Limited is Gouray Lodge, Le
Mont de Gouray, Grouville, Jersey, Channel Islands JE3 9GH; of Udaset Holdings
Limited is Lord Coutanche House, 62-68 Esplanade Street, St. Helier, Jersey,
Channel Islands JE4 5PS; of Kanis SA, c/o SG Associates, Ltd., 45 Queen Anne
Street, London W1G 9JF, U.K.; of Trustees of Cadogan Family Settlement is c/o
May, May and Merrimans, 12 South Square, Grays Inn, London WC1R 5HH, U.K.; of
Positive Securities Limited is 31, The Parade, St. Helier, Jersey, Channel
Islands JE2 3QQ; of Fuel Tech, Inc. is 512 Kingsland Drive, Batavia IL 60510; of
Waltham Forest Friendly Society is Key House, 342 Hoe Street, Walthamstow,
London E17 9XP, U.K.; of Ruffer LLP is 103 Wigmore Street, London W1U 1QS; and
of Hawkwood Fund Management and of Duckworth Esq. is The Jersey Trust Company,
Elizabeth House, 9 Castle Street, St. Helier, Jersey, Channel Islands JE4 2QP;
of Ram Ltd. is 45 Queen Anne Street, London W1G 9JF, U.K.; of Avenir Finances

                                       15
<PAGE>
S.A. is Channel House, Forest Lane, St. Peter Port, Guernsey GY1 4HL, U.K.; the
address of directors, nominees and Named Executive Officers is c/o Clean Diesel
Technologies, Inc., Suite 702, 300 Atlantic Street, Stamford, Connecticut 06901.

(2)  In addition to shares issued and outstanding, includes shares subject to
options or warrants exercisable within 60 days for Channel Hotels and Properties
Limited, 382,595 shares; Udaset Holdings Limited, 234,103 shares; Kanis SA,
206,432 shares; Positive Securities Limited, 90,164 shares; Waltham Forest
Friendly Society, 25,000 shares; Fuel Tech, Inc., 25,000 shares; Waltham Forest
Friendly Society, 25,000 shares; Hawkwood Fund Management, 740,740 shares; Ram
Ltd., 383,520 shares; Avenir Finances SA, 789,434 shares; Dr. Copan, 90,741
shares; Mr. de Havilland, 206,317 shares; Mr. Rogers, 178,704 shares; Dr.
Steiner, 330,000 shares; Mr. Gray, 331,794 shares; Mr. Grinnell, 220,000 shares;
Mr. McCloy, 90,000 shares; Mr. Merrion, 80,000 shares; Mr. Reid, 144,666 shares;
Ms. Ruple, 22,375 shares; and, for all directors and officers as a group,
1,694,596 shares.  The amount for Mr. de Havilland and for directors and
officers as a group does not include 16,537 shares owned by Mr. de Havilland's
adult children as to which he disclaims beneficial ownership.

(3)  To our knowledge the directors and Named Executive Officers hold sole
beneficial ownership and investment power over the shares reported; Fuel Tech,
Inc. has sole beneficial ownership and investment power over its shareholdings,
and the remaining beneficial owners have at least shared investment power over
their shareholdings.

(4)  The percentages are percentages of outstanding stock and have been
calculated by including warrants and options exercisable within 60 days by the
respective stockholders.  In addition 3% rather than 5% is presented in
accordance with standard U.K. practice due to our listing on the Alternative
Investment Market of the London Stock Exchange.

(5)  Mr. de Havilland is one of four trustees who have no beneficial interest in
Cadogan Family Settlement.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

     Please see the Equity Compensation Plan Information table in Item 5 of this
annual report on Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
          INDEPENDENCE

MANAGEMENT AND SERVICES AGREEMENT

     We entered into a Management and Services Agreement dated July 1995, as
amended (the "Services Agreement") with Fuel Tech, Inc., successor to Fuel-Tech
N.V. As of March 31, 2007, Fuel Tech, Inc. held 5.7% of our Common Stock.
Services provided to us under the Services Agreement are principally legal
services provided by Mr. Grinnell who is an employee and director of Fuel Tech,
Inc. and a director of Clean Diesel Technologies. In 2006, 2005 and 2004, the
amounts of $70,000, $71,000, and $69,000, respectively, were paid by us to Fuel
Tech, Inc. on account these services. Mr. Grinnell will recuse himself from
consideration of any transactions between these companies that may be, or may
appear to be, material to either company.

TECHNOLOGY ASSIGNMENTS

     Our technology is comprised of patents, patent applications, trade or
service marks, data and know-how.  A substantial portion of this technology is
held under assignments of technology from Fuel Tech, Inc.  The assignments
provide for running royalties payable to Fuel Tech, Inc. commencing in 1998 of
2.5% of gross revenues derived from platinum fuel catalysts.  Such royalties
incurred in 2006, 2005 and 2004 were $14,500, $10,300 and $7,450.  We may at any
time terminate the royalty obligation by payment to Fuel Tech, Inc. of $2.2
million in 2007 or $1.1 million in 2008.

DIRECTOR INDEPENDENCE

     Messrs. Gray, de Havilland, McCloy and Merrion are independent directors
under the definition of NASDAQ Rule 4500(a)(15).  The members of our Audit
Committee, Messrs. Gray, McCloy and Merrion, are also independent under the more
restrictive independence standard applicable to Audit Committees in NASDAQ rule
4350(d).  While Clean Diesel Technologies is not listed on a recognized stock
exchange, the Board generally follows certain policies of The Nasdaq Stock
Market, Inc. as best practice.


                                       16
<PAGE>
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Audit Fees

     Fees for professional services provided by Eisner LLP, Certified Public
Accountants ("Eisner"), Clean Diesel Technologies, Inc.'s independent registered
public accounting firm, in the last two fiscal years by category were:

<TABLE>
<CAPTION>
                               2006     2005
                              -------  -------
<S>                           <C>      <C>
          Audit Fees          $61,000  $65,178
          Audit-Related Fees        -        -
          Tax Fees                  -        -
          All Other Fees            -        -
                              -------  -------
                              $61,000  $65,178
                              =======  =======
</TABLE>

     Audit Fees include fees for the audit of the financial statements,
quarterly reviews and assistance with regulatory filings and compliance.

     Pre-Approval Policies and Procedures

     The Clean Diesel Technologies Audit Committee policy is that it must
approve in advance an engagement of our independent registered public accounting
firm for any audit or non-audit service.


                                       17
<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Clean Diesel Technologies, Inc. has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                          CLEAN DIESEL TECHNOLOGIES, INC.



April 26, 2007                            By: /s/ Bernhard Steiner
--------------                               ---------------------------
Date                                      Bernhard Steiner
                                          Chief Executive Officer, President
                                          and Director


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of Clean Diesel Technologies, Inc. and in the
capacities and on the date indicated have duly signed this report.


/s/ Bernhard Steiner       Chief Executive Officer, President and Director
------------------------   (principal executive officer)
    Bernhard Steiner

/s/ Ann B. Ruple           Chief Financial Officer, Vice President and Treasurer
------------------------   (principal financial and accounting officer)
    Ann B. Ruple

/s/ John A. de Havilland   Director
------------------------
    John A. de Havilland

/s/ Derek R. Gray          Director, Non-Executive Chairman of the Board of
------------------------   Directors
    Derek R. Gray

/s/ Charles W. Grinnell    Director, Vice President and Corporate Secretary
------------------------
    Charles W. Grinnell

/s/ John J. McCloy II      Director
------------------------
    John J. McCloy II

/s/ David F. Merrion       Director
------------------------
    David F. Merrion


Dated:  April 26, 2007


                                       18