This study experimentally investigates the combined effects of exhaust gas recirculation (EGR) and injection timing on the combustion and emission characteristics of a hydrogen direct injection engine. A single-cylinder 395 cc research engine was used, with injection timing varied from 60° to 180° BTDC and EGR rates from 0% to 30%. In-cylinder pressure, apparent heat release rate (AHRR), NOx, and unburned hydrogen concentrations were measured to analyze the influence of mixture formation and dilution on engine performance. Under non-EGR conditions, retarding the injection timing promoted mixture stratification, resulting in faster flame propagation and shorter combustion duration. However, localized high-temperature regions increased NOx formation, while incomplete combustion in lean or rich zones elevated unburned hydrogen emissions. When EGR was introduced, both ignition delay and combustion duration increased due to reduced oxygen concentration and thermal dilution. Nevertheless, the net indicated mean effective pressure (nIMEP) and indicated thermal efficiency (ITE) decreased by less than 1.6% and 1%, respectively, demonstrating that hydrogen’s fast combustion characteristics compensated for the reactivity loss. As the EGR rate increased, the formation of NOx and the emission of unburned hydrogen showed noticeable changes. At 30% EGR, NOx emissions decreased by up to 76% compared to the non-EGR baseline while maintaining stable combustion. However, excessive EGR resulted in increased unburned hydrogen emissions. These findings confirm that, with a properly optimized EGR rate, EGR is a more effective strategy than injection timing control for NOx reduction, achieving significant reduction with minimal efficiency penalty, and providing design insights for practical hydrogen-fueled engines.