NEWARK, DE - O2Diesel Corporation (AMEX:OTD) announces the completion of a medical and economic study performed by the University of Sao Paulo's School of Medicine and the Laboratory of Atmosphere and Air Pollution. In the Sao Paulo Metropolitan Region (SPMR), the population exceeds 20 million individuals with outdoor air pollution increasing as a consequence of the combustion of fossil fuels for transport. According to figures released in 2002 by the Urban Transportation Agency of Sao Paulo and the Brazilian Agency of Transport, the total fleet of diesel powered buses exceeds 43,000 vehicles combined with another 180,000 diesel trucks in the SPMR.

The study concluded that by switching over 100% of the bus fleet and 50% of the truck fleet in the Metropolitan Region of Sao Paulo to O2Diesel's clean-burning ethanol-diesel blended fuel with its subsequent reduction in harmful Particulate Matter, sulfur dioxide and carbon monoxide, at least 769 human fatalities per year could be avoided. These avoidable fatalities included pediatric respiratory, elderly respiratory, ischemic cardiovascular diseases, late fetal deaths, and mortality due to elderly cardiovascular diseases.

"We have always thought that there should be direct health benefits associated with our cleaner burning diesel fuel," says O2Diesel's CEO Alan Rae, "but this is the first time that an actual University Study confirmed what our common sense always lead us to believe."

The Company's Sao Paulo based subsidiary, O2Diesel Ltda., is in the process of commercializing the fuel after several years of successful testing that have supported the University's findings relative to providing substantially lower diesel fuel emissions compared to standard, untreated diesel. After five years of research and development and after attaining California Air Resource Board ("CARB") verification if its emission results, O2Diesel's north American operations began commercialization in July of this year.

About O2Diesel: The Company and Its Fuel Technology

O2Diesel Corporation, and its U.S. subsidiary O2Diesel, Inc., is a pioneer in the commercial development of a cleaner-burning diesel fuel alternative that provides exceptional performance and environmental qualities for centrally fueled fleets and off-road equipment of all kinds. Engineered and designed for universal application, O2Diesel(TM) is an ethanol-diesel blend that substantially reduces harmful emissions without sacrificing power and performance. Extensive laboratory and in-use field tests have demonstrated the effectiveness of O2Diesel(TM) -- the introduction of this cost-effective, cleaner-burning diesel fuel is now underway in the United States and other global markets. For more information please consult: www.o2diesel.com.

Forward Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding O2Diesel Corp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

This release is available on the KCSA Public Relations Worldwide Web site at www.kcsa.com.

"O2Diesel" is a trademark of O2Diesel Corp.

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Media Contacts:

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tfromer@kcsa.com/mgallo@kcsa.com

or

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Henry Feintuch/Scott Berwitz
212-896-1212/212-896-1272
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