Energy savings and emission reductions are essential for internal engines. Turbocharger is critical for engine system performance and emission. In this study, the engine simulation program was used to systematically optimize the engine turbocharger system performance. The velocity ratio concept was used in the engine simulation program to consider the performance impacts of the wheel diameter ratio between compressor and turbine. An integral consideration for both compressor and turbine was proposed to design the new turbocharger. An optimization process was used to design the compressor. The performance and mechanical integrity assessments for final designs by using computational fluid dynamics (CFD) and finite element analysis (FEA) solvers were reported in this paper. The optimized compressor wheel has some distiguished features comparing with conventional designs. In this design, the splitter is not located at the middle between the two main blades; the compressor wheel exit diameter at shroud is larger than exit diamerer at the hub. The new compressor was tested on both gas stand and engine. The numerical results are fairly agreed with gas stand tests. The tests showed about 1.2% of the engine BSFC reduction without sacrificing the emission and cost. This study demonstrated that a systematic method in simulation and a compressor design optimization process could optimize the engine system and improve the engine performance.