High octane fuel (e.g., E85) effectively suppresses knock, but the octane ratings of such fuels are much above what is required under normal driving conditions. It is important, therefore, to understand the octane requirement of the engine itself over its full range of operation and apply that knowledge to practical driving cycles to understand fuel octane utilization, especially of a turbocharged engine. By carefully defining knock limits, the octane requirement of a 2-liter turbocharged spark ignition engine was experimentally quantified over a wide range of loads and speeds using PRF blends and gasoline-ethanol blends. Utilizing this knowledge and engine-in-vehicle simulations, the octane requirements of various driving cycles were calculated for a passenger car and a medium duty truck model. The effects of spark retard, engine downsizing at fixed vehicle performance, and vehicle types, on engine efficiency, fuel economy, and ethanol consumption were analyzed through parametric study. The average octane ratings of fuel needed in real-world driving were in the 60-80 RON range (the maximum RON required was 90-100.) Downsizing and vehicle loading in trucks increased octane requirement substantially. Matching the fuel supplied to the engine’s octane requirement by varying the amount of ethanol using a dual fuel system resulted in a significant increase in the average engine brake efficiency (about 30% increase) and fuel economy (about 26%) depending on driving details. Accordingly, ethanol consumption increased, but up to 5 CAD spark retard reduced the ethanol consumption considerably while not compromising efficiency.