The transportation industry seeks sustainable alternatives to fossil fuels, and hydrogen internal combustion engines (H₂ICE) have emerged as a practical solution. They offer near carbon-free operation while integrating with existing engine technology and infrastructure. Thanks to hydrogen’s specific properties, lean combustion can be achieved, significantly reducing NOx emissions. However, operating a commercial engine under ultra-lean conditions at high load presents challenges, particularly in maintaining volumetric efficiency and power density. This study analyzes the combustion behavior, NOx emissions, and loss mechanisms in a four-cylinder, direct-injection, hydrogen-fueled engine, equipped with a variable geometry turbine (VGT). The engine was tested at three BMEP levels (8, 10, and 12 bar) under ultra-lean conditions, with lambda varied between 2.2 and 3.6. Unlike conventional approaches, fuel mass was held constant at each load, and lambda was adjusted by varying intake air mass to isolate the effects of air-based dilution on combustion. This strategy was enabled by using the VGT, which provided high intake pressures necessary for sustaining ultra-lean operation at high loads. Three test scenarios were designed to decouple the influence of lambda, intake pressure, and spark timing on combustion behavior. A validated 0D/1D model developed in GT-SUITE was used alongside experimental data for detailed combustion insight. The results showed stable combustion across all tested lean conditions, with indicated thermal efficiency (ITE) peaking near 44% around λ = 3. NOx emissions were reduced to near-zero levels above λ = 3.4. Energy balance analysis revealed that increasing lambda reduced wall and exhaust heat losses, while unburned fuel and pumping losses increased under very lean conditions. The results also emphasized the critical role of intake pressure in influencing peak in-cylinder pressure and combustion phasing, particularly at fixed spark timing.