LCO (light catalytic gas oil) hydrotreating was performed on a laboratory-scale trickle bed reactor to obtain a 15 ppm sulfur fuel. The fuel was then selectively oxidized using a CuCr/IP(4-PVP) catalyst in air at different operating conditions on a laboratory-scale continuously stirred tank reactor. The oxygenated and polyoxygenated compounds formed were measured by a previously developed HPLC GC-MS technique, and acid content and fuel stability were measured using standard ASTM analytical procedures. Additionally, a simplified reaction model was developed to predict oxygen incorporation into the LCO, and the oxygenated fuel was tested in a diesel engine. The results show a decrease in emissions by low-sulfur diesel oxidation, as well as the benefits of having a high selectivity toward ketone formation when using a CuCr/IP(4-PVP) catalyst. The need to carefully control the depths of oxygen incorporation to preserve fuel stability was verified. A simplified kinetic model is proposed to predict oxygen incorporation in the fuel.