Clean Diesel Technologies Reports 2006 First Quarter Results.

STAMFORD, Conn. -- Clean Diesel Technologies, Inc. ("Clean Diesel" or "The Company") (EBB: CDTI, AIM: CDT/CDTS & XETRA: CDI), a developer of technological solutions to reduce harmful engine emissions, today announces its results for the 2006 first quarter. Clean Diesel achieved a 40% increase in revenue compared with the same quarter in the previous year. Platinum Plus fuel borne catalyst (FBC) sales and other revenue, including a market assessment project, increased in the first quarter of 2006. Clean Diesel has won several new customers in Europe and the US, and also is seeing strong additive growth from the U.S. mining sector.

Revenue for the first quarter 2006 was $269,000 with a net loss of $1,584,000 ($0.06 loss per share), compared to revenue of $192,000 in the first quarter of 2005 with a net loss of $1,184,000 ($0.07 loss per share).

Dr. Bernhard Steiner, President and CEO, commented: "The Company continues to see a growing demand for its technologies. Recent interest in alternative energy, pending emission reduction requirements in the United States, Europe and Asia, and growing environmental activity, are providing Clean Diesel with global opportunities. Clean Diesel is now operating on four continents and rapidly expanding its partner and customer base to address demand."

Dr. Steiner added: "With the looming 2007 - 2010 emission reduction requirements for NOx and particulate matter, Clean Diesel's technologies have gained substantial interest and acceptance with original equipment manufacturers and Tier one suppliers. As a result, Clean Diesel is now in testing programs and negotiations with most leading engine manufacturers or suppliers."

Expenses in the first quarter of 2006 increased in comparison to the first quarter of 2005 as a result of one-time expenses and new accounting rules. Included in the first quarter 2006 general and administration expense is $357,000 of severance charges. Also included in the first quarter 2006 expenses is $53,000 of non-cash compensation expense relating to stock options granted prior to January 1, 2006. As now required under the United States Financial Accounting Standard 123R, the fair value of options granted must be calculated and the expense recognized over the vesting term of the option.

Research and development expense also increased as a result of the timing of projects in the first quarter 2006 versus the 2005 first quarter. Clean Diesel performed additional testing on its recently acquired wire mesh diesel particulate filter technology and new patented bio-diesel formulations.

Dr. Steiner noted: "The global interest in bio-diesel fuel is expanding rapidly. Clean Diesel has developed proprietary bio-diesel formulations that eliminates the NOx increase associated with most bio-diesel blends and provides additional particulate reduction and fuel economy improvement. Clean Diesel's low emission bio-fuels research is intended to expand the potential bio-diesel and renewable fuels market. Clean Diesel is actively working with bio-diesel suppliers and blenders to incorporate our low emission bio-diesel formulation into their commercial products."

Full financial information is included in the Company's Form 10-Q filed with the Securities and Exchange Commission (www.SEC.gov).

About Clean Diesel Technologies, Inc.

Clean Diesel Technologies, Inc. and its UK representative office, Clean Diesel International LLC, is a developer of technological solutions to reduce harmful engine emissions. Clean Diesel Technologies has patented products that reduce emissions from combustion engines while simultaneously improving fuel economy and power. Products include Platinum Plus(R) fuel-borne catalysts (FBC), the Platinum Plus Purifier System, catalyzed wire mesh diesel particulate filter technologies and the ARIS(R) injection systems for selective catalytic reduction of NOx. Platinum Plus and ARIS are registered trademarks of Clean Diesel Technologies, Inc. For more information, visit CDT at www.cdti.com or contact the Company directly.

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known or unknown risks, including those detailed in the Company's filings with the Securities and Exchange Commission, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

CLEAN DIESEL TECHNOLOGIES, INC.
                        STATEMENT OF OPERATIONS
                              (Unaudited)


                                     (in thousands, except share data)

                                                  Three Months Ended
                                                       March 31
                                                     2006      2005
Revenue:
Additive revenue                                  $    150   $     95
Hardware revenue                                        45         92
License, royalty and other revenue                      74          5
                                                   --------   --------
Total revenue                                          269        192

Costs and expenses:
Cost of revenue                                        116        110
General and administrative                           1,529      1,165
Research and development                               218         59
Patent amortization and other expense                   43         39
                                                   --------   --------

Loss from operations                                (1,637)    (1,181)
Foreign currency exchange gain (loss)                   14        (19)
Interest income                                         27          9
Miscellaneous income                                    12          0
                                                   --------   --------

Net Loss                                          $ (1,584)  $ (1,191)
                                                   ========   ========

Basic and diluted loss per common share           $  (0.06)  $  (0.07)
                                                   ========   ========

Weighted average number of common shares
 outstanding                                        26,085     17,166
                                                   ========   ========



                    CLEAN DIESEL TECHNOLOGIES, INC.
                            BALANCE SHEETS


                                     (in thousands, except share data)

                                                  March 31,   Dec. 31,
                                                    2006       2005
                                                 (Unaudited)
                                                 ----------- --------

Assets
Current Assets
Cash and cash equivalents                          $  3,895  $  4,513
Accounts receivable, net                                166       125
Inventories                                             263       285
Other current assets                                    111        94
Subscription receivable, net                              0       488
                                                    --------  --------

Total current assets                                  4,435     5,505

Patents, net                                            576       567
Fixed assets, net                                       150       175
Other assets                                             27        27
                                                    --------  --------

Total assets                                       $  5,188  $  6,274

Liabilities and Stockholders' Equity
Current Liabilities

Deferred revenue                                         11         9
Accounts payable and accrued expenses                   909       487
                                                    --------  --------
     Total current liabilities                          920       496

Stockholders' equity:
Preferred stock, par value $0.05 per share,
 authorized 100,000 shares, no shares issued
 and outstanding                                       --        --
Common stock, par value $0.05 per share,
 authorized 30,000,000 shares, issued and
 outstanding 25,369,358 and 17,165,868
 shares respectively                                  1,304     1,268
Common stock, par value $0.05 per share,
 subscribed and to be issued; 705,113
 shares in 2005                                          --        35
Additional paid-in capital                           44,141    44,068
Accumulated deficit                                 (41,177)  (39,593)
                                                    --------  --------

Total stockholders' equity                            4,268     5,778
                                                    --------  --------

Total liabilities and stockholders' equity         $  5,188  $  6,274
                                                    ========  ========