Liquid hydrocarbon fuels are an excellent source of chemical energy per unit weight and volume. However, an efficient process for converting this energy into useful work has thus far been elusive for portable power systems. This work characterizes the combustion process in a 5-cc displacement miniature four-stroke engine with a peak specific power measured to be approximately 300 W/kg. Although this value is significantly higher than the 100 W/kg achieved by most electrochemical devices, the peak measured fuel conversion efficiency (9.3%) is low compared to full-size engines, and the value falls below 5% over much of the engine’s operating range. The efficiency is even worse when considering the possibility that some of the lubricating castor oil might also be acting as a fuel. Cylinder pressure measurements show that friction and pumping losses are substantial. Based on a semi-theoretical analysis, the turbulence level and burning velocity in the combustion chamber of the miniature engine are not fundamentally different from those in a full-size engine. However, energy lost through heat transfer to the cylinder walls, lack of sufficient residence time for combustion, and the effects of crevice volume are amplified at small scales because of high surface-area-to-volume ratios. The experimental results provide the basis for some redesign recommendations.