This paper investigates the operating characteristics of an off-road diesel engine to enhance its power performance in plateau. First, the impacts of altitude on the power, fuel economy, and emissions characteristics were analyzed by a bench test. Second, the combustion and overall performance working at different altitudes were studied by three-dimensional numerical simulation, including the relationship between fuel injection parameters and engine performance. The results showed that altitude significantly affects the performance of the off-road diesel engine. As the altitude increased from 0 m to 2000 m, the engine power decreased as much as 4.3%, and the brake-specific fuel consumption (BSFC) increased as much as 6%. At the peak torque condition, the intake manifold boost pressure and the exhaust manifold pressure both reduced with a rise of altitude, while the intake and exhaust manifold temperatures both increased with a rise of altitude. Finally, after comparing the in-cylinder flow conditions and combustion characteristics given by six combustion chamber designs that have different shrinkage ratios, the engine performance at 4000 m altitude with five different fuel spray angles were further optimized. The engine rated power increased by 8.2% when the shrinkage ratio was 7.28% and the fuel spray angle was 150 deg at the 4000 m altitude.