A very promising concept for small range extenders (peak power less than 40 kW) is represented by the 2-stroke, direct injection spark ignition engine, with scavenging and exhaust ports controlled by the piston, and an external pump. The most important issue to be addressed on this type of engines is the compliance with stringent rules on pollutant emissions, which depends on combustion patterns and the quality of the scavenging process. The latter is generally hindered by the symmetry of ports timings, but this handicap can be canceled by adopting a patented rotary valve, controlling the flow through a set of auxiliary transfer ports, and using a piston pump for delivering air to the power cylinder and enhancing the balance of the crankshaft. The paper reviews the design of a virtual engine, rated at 35 kW at 5600 rpm, and developed according to the above mentioned concepts. Design has been driven by CFD simulation, using, whenever possible, experimentally calibrated numerical models, or experimental information derived from similar projects. Particular care has been devoted to characterize the scavenging process and the flow patterns within the cylinder and through the ports, analyzing the influence of the rotary induction valve. Engine performance parameters have been predicted by using a well-established commercial software (GT-Power, by Gamma Technologies), while CFD-3D analyses have been carried out by means of a customized version of the KIVA-3V code. The whole study is conceived as the basis for the construction of a physical prototype. The power target has been virtually achieved with a very light and compact engine (estimated weight without the close-coupled electric motor: 35 kg). A three-way catalyst allows the engine to comply with the most stringent emission regulations, without relevant penalizations on fuel efficiency. Furthermore, the engine can work with lean mixtures, achieving a minimum specific fuel consumption comparable to a current automotive Diesel engine (223 g/kWh). This excellent result is due to the low friction and pumping losses of the 2-Stroke engine, as well as to the compactness of the combustion chamber and the capability to stratify the charge.