Although homogeneous charge compression ignition (HCCI) diesel engines are the favored source of power with near zero oxides of nitrogen (NOx) and particulate matter emissions owing to a higher degree of homogeneity and elimination of diffusion phase combustion, the main drawback is the uncontrolled start of combustion along with high CO and unburned hydrocarbon emissions. In the present work, experimental investigations were carried out on a single cylinder diesel engine operating in HCCI combustion mode using external air-fuel mixture preparation. The regulated percentage of steam is added inside the mixing chamber and the effects on the combustion, performance and emission characteristics were reported for various steam injection rates at different brake mean effective pressures. The results obtained show that the brake thermal efficiency was improved to 21.048% with the addition of 20% steam addition and the NOx emissions were also reduced significantly. The emissions of CO and unburned hydrocarbon were found 0.7% and 93 ppm respectively at the steam addition rate of 20%, however a rapid increase was observed if the steam injection rate was increased further. Overall, the present work shows that by the addition of steam, the CO and unburned hydrocarbon emissions can be reduced significantly along with NOx emissions and also there is a greater potential to control the start of combustion.