An existing coal-water slurry fueled diesel engine cycle simulation was modified to include particle-to-particle and droplet-to-droplet interactions during the combustion and vaporization processes. Two aspects of these interactions, known as group effects, were considered. Group Effect Number 1 (GE1) relates to the species concentrations and temperature profiles between particles during combustion and between droplets during vaporization. Group Effect Number 2 (GE2) relates to the blockage of air entrainment to the fuel region due to the large momentum flux of volatiles and CO during combustion or water vapor during vaporization. The major conclusions were that GE1 affected the detailed process characteristics and in-cylinder conditions, and moderately affected the overall engine performance for the cases studied. These results were largely due to suppression of the water vaporization process relative to the case with no group effects. GE2 did not significantly affect the in-cylinder processes or the overall performance of the engine for the cases studied.