A new air-assisted injection system-based two-stroke engine has been developed at the Indian Institute of Science, Bangalore over the past few years and shows the potential to meet emission norms such as Euro II and Euro III and yet deliver satisfactory performance. The 70 cc engine works on the direct mixture injection principle with scavenging performed by air alone instead of an air-fuel mixture. A small 20 cc pump driven off the engine is used for mixture preparation prior to in-cylinder injection of the mixture. In the present study, the mixture injection and subsequent charge stratification process inside the engine cylinder is modelled. A three-dimensional compressible flow code with a standard k-ε turbulence model with wall functions is developed and used for this modelling. To account for the moving boundary or piston in the engine cylinder domain, a non-stationary and deforming grid is used in this region with stationary cells in the ports and connecting ducts. A flux conservation scheme is used in the domain interface to allow the in-cylinder moving mesh to slide past the fixed port meshes. The initial conditions for flow parameters are taken from the output of a three-dimensional scavenging simulation. The state of the inlet charge is obtained from a separate modelling of the air-assisted injection system of this engine. The simulation results show that a large, near-stoichiometric region is present at most operating conditions in the cylinder head plane. The state of the in-cylinder charge at the onset of ignition is studied, leading to a good understanding of the mixing process. In addition, the sensitivity of two critical parameters in the mixing and stratification is investigated. The suggested parameters substantially enhance the flammable proportion at the onset of combustion. The predicted pressure-crank angle history from a combustion simulation supports this recommendation. © IMechE 2007.