Matlab/Simulink, Chemkin, as well as the finite element method (FEM) have been used to investigate the performance of the novel development of a two-stroke free-piston engine for electrical power generation. It is called free-piston linear alternator (FPLA). The motion differences between the FPLA and the internal combustion engine (ICE) are also presented. The effects of various resistance loads and equivalence ratios are studied. The simulation results show that the FPLA has a buildup nature to change the top dead center (TDC) according to loads and other parameters. The high compression ratio can be achieved easily by decreasing the equivalence ratio, which is an effective way to increase the indicated thermal efficiency. Besides, the peak temperature is much lower than the traditional engine under the same condition, which could reduce the temperature-dependent emissions.