Liquefied Petroleum Gas (LPG), as a common alternative fuel for internal combustion engines is currently widespread in use for fleet vehicles. However, a current majority of the LPG-fueled engines, uses port-fuel injection that offers lower power density when compared to a gasoline engine of equivalent displacement volume. This is due to the lower molecular weight and higher volatility of LPG components that displaces more air in the intake charge due to the larger volume occupied by the gaseous fuel. LPG direct-injection during the closed-valve portion of the cycle can avoid displacement of intake air and can thereby help achieve comparable gasoline-engine power densities. However, under certain engine operating conditions, direct-injection sprays can collapse and lead to sub-optimal fuel-air mixing, wall-wetting, incomplete combustion, and increased pollutant emissions. Direct-injection LPG, owing to its thermo-physical properties is more prone to spray collapse than gasoline sprays. However, the impact of spray collapse for high-volatility LPG on mixture preparation and subsequent combustion is not fully understood. To this end, direct-injection, laser-spark ignition experiments using propane as a surrogate for LPG under lean and stoichiometric engine operating conditions were carried out in an optically accessible, single cylinder, heavy-duty, diesel engine. A quick-switching parallel propane and iso-octane fuel system allows for easy comparison between the two fuels. Fuel temperature, operating equivalence ratio and injection timing are varied for a parametric study. In addition to combustion characterization using conventional cylinder pressure measurements, optical diagnostics are employed. These include infrared (IR) imaging for quantifying fuel-air mixture homogeneity and high-speed natural luminosity imaging for tracking the spatial and temporal progression of combustion. Imaging of infrared emission from compression-heated fuel does not reveal any significant differences in the signal distribution between collapsing and non-collapsing sprays at the spark timing. Irrespective of coolant temperatures, early injection timing resulted in a homogeneous mixture that lead to repeatable flame evolution with minimal cycle-to-cycle variability for both LPG and iso-octane. However, late injection timing resulted in mixture inhomogeneity and non-isotropic turbulence distribution. Under lean operation with late injection timing, LPG combustion is shown to benefit from a more favorable mixture distribution and flow properties induced by spray collapse. On the other hand, identical operating conditions proved to be detrimental for iso-octane combustion most likely caused by distribution of lean mixtures near the spark location that negatively impact initial flame kernel growth leading to increased cycle-to-cycle variability.