In the case of small SI engines for two-wheelers emission reduction will preferably be achieved through the use of lean mixtures since catalytic converters will increase the cost. In such cases a very close control over the air fuel ratio will be needed. In this work a carbureted 125cc small capacity two-wheeler engine was modified to operate with Port Fuel Injection (PFI) for improved control over the air fuel ratio. A throttle body was specially made to house the injector and a position sensor. A cam position sensor, crank angle sensor, manifold air pressure (MAP) sensor, 60-2 toothed wheel for precise control of the events on the angle basis were used. Extensive tests were conducted with the throttle body and fuel injector to obtain the mathematical models for the inlet manifold and fuel injector. These were used to make the model based controller. The dSPACE - Micro Auto Box platform was used to develop and test the control algorithms. Software was written using SIMULINK. The closed loop PID algorithm was used for air-fuel ratio control and map based spark time control for steady state operation and model based control during the transient operation. The controller is able to maintain air fuel ratio as demanded in both steady and transient conditions in the test bed and there are significant improvements in CO, HC, NOX emissions and fuel consumption as compared to the carbureted operation. Copyright © 2008 SAE International.