Because of increasing energy demand and environmental pollution, alternative fuels such as ethanol, methanol, natural gas, hydrogen and LPG have been used in spark ignition engines. Ethanol has an important place among the alternative fuels as its octane number is high, exhaust emission level is low and it is produced from biomass sources. In this study, the effect of the use of pure ethanol in an SI engine which has variable compression ratio on engine performance and emissions were investigated experimentally. In the experiments, a single cylinder, four stroke, spark ignition research engine which has a variable compression ratio was used. The experiments were performed by running the engine at the 6/1 compression ratio with gasoline and ethanol, and at the 8/1, 10/1 compression ratios with ethanol. The results showed that some decreases were obtained in CO, CO(2) and NO(x) emissions without any noticeable power loss when ethanol was used instead of gasoline at the 6/1 compression ratio. By increasing the compression ratio (10/1), engine power was increased up to 25% with ethanol. CO, CO(2) and NO(x) emissions were reduced about 41%, 21% and 26%, respectively. Moreover, HC emissions were increased about 40%. According to the results obtained, it can be said that using ethanol at high compression ratios in the engines significantly improves the engine performance and decreases the exhaust emissions.