Engine downsizing has been considered as a promising approach for reducing CO2 emitted from internal combustion engines, since the long term goal of International Energy Agency was published in 2011.  By engine downsizing, the engine dimensions would decline while the performance is preserved. So, the fuel consumption and engine emission decrease as well as power to weight ratio increases. In this study, the Iranian national engine EF7 is considered as the target of downsizing and three conceptual designs for downsizing are propose: 3-cylinder gasoline turbocharged (EF7α), 3-cylinder CNG turbocharged (EF7β) and 3-cylinder CNG turbocharged with improved compression ratio (EF7γ). The performance of each concept is investigated and compared with the base engine employing a hybrid-structured engine simulation tool involving a 1D model for engine components and a thermodynamic two-zone model for combustion process. The model is validated with experimental data for base engine. Indeed, the performance of the gasoline-fueled version of downsized engine EF7α is estimated close to the base engine. Shifting the fuel to CNG (EF7β) would lead to lower and poor performance of engine, especially in low load regions. Modification of spark timing would somehow solve the problem however deficiency in lower engine speeds still remains. Employing anti-knock index as the main advantage of CNG as a fuel for spark ignition engine, the third concept (EF7γ) is introduced by improving the compression ratio. Results show that a 3-cylinder CNG fueled turbocharged engine with improved compression ratio would be a good choice for EF7 downsizing.