Due to its load control strategy via fresh charge quantity, pumping loss in a homogenous charge gasoline engine is a significant contributor to the high fuel consumption rate at light load. Exhaust gas recirculation (EGR) and lean burn technologies are the common means to reduce gasoline engine pumping loss for fuel economy improvement. Many previous publications compared the EGR and lean burn concepts. However, few of those were able to compare the EGR and lean burn concepts under the same in-cylinder dilution basis. Usually the un-swept in-cylinder residual gas fraction (RGF), which can be significant at very low loads, was ignored due to lack of appropriate method to determine it. Also the theoretical potential and practical limitations were rarely discussed. In this paper, a Naturally Aspirated (NA) gasoline engine was systematically tested for both the EGR and lean mixture concepts on an engine dyno. under the same speed and load conditions. In-cylinder processes, i.e. dynamic cylinder pressure traces, pumping loop and therefore pumping loss, heat release rate profiles, etc., were measured and analyzed. The combustion efficiency was calculated from the measured exhaust gas composition. The total in-cylinder RGF including EGR and the un-swept residual gas which was difficult to measure directly, was obtained by utilizing a technology developed by the authors from previous work. A new term to describe the overall in-cylinder dilution effect is derived and the influences on engine performance parameters, such as intake pressure level, PMEP, ISFC, raw exhaust emissions, etc. and combustion characteristics of EGR/RGF and A/F ratio, are compared and analyzed under the same in-cylinder dilution effect. Also demonstrated are the theoretic potential and practical limitations on pumping loss reduction via in-cylinder dilution in a SI engine.