This paper describes the current state of available gasification technology for utilizing producer gas for I.C engine application & different ways to optimize the performance. Producer gas is promising alternative fuel to meet energy demand in many countries which is defined as gas generation from solid waste through thermo chemical conversion route (also termed as gasification) can be used for fuelling a compression ignition (CI) engine in duel fuel mode or a spark ignition (SI) engine in the gas alone mode. This technology is also environmentally benign and holds large promise for the future. This paper summarizes the work conducted using biomass derived producer gas in reciprocating internal combustion engines. Survey in the field of producer gas based engines reveals modest research work have been carried out since the inception of biomass/ charcoal gasification systems. Producer gas contains a large fraction of inert (> 50%) and with laminar burning velocity being high (due to presence of H2), smooth operation at higher Compression ratio does not seem impossible. These aspects are very vital in establishing the fact that close to comparable power (with a lesser extent of de-rating 15-20%) with producer gas by operating in engine at higher compression ratio. This could be attributed to two reasons, namely non- availability of standard gasification system that could generate consistent quality producer gas and the other relating to misconceptions about producer gas (related to compression ratio limitation due to knock tendency and de-rating). The knock tendency can be expected to be better on account of large fraction of inert gas as compared to natural gas. However, there has not been any research on octane rating test conducted on producer gas fuel and moreover it is not clear if any established test procedure exists for producer gas like the methane number test for natural gas and biogas. De-rating could be due to reduction in the mixture energy density and the product-to- reactant mole ratio. If one were to summarize earlier studies, it becomes evident that no systematic investigation has been attempted so far in identifying if limitation of knock exists with producer gas operation at compression ratio comparable with the diesel engine operation.