Abstract: This study aims to explore the performance and combustion characteristics of a direct-injection hydrogen engine. A 36.8 kW non-road China IV diesel engine was modified to alter its intake manifold and cylinder head. A four-stroke hydrogen engine was then developed to investigate its performance under full-load conditions. A systematic investigation was also implemented to explore the impact of ignition timing on its combustion characteristics and knocking tendency. The hydrogen engine was operated stably to fully meet the requirements of the power output during testing. The throttles were also kept fully open. The optimal ignition timing was selected for each full-load condition. While the engine speed was varied from the idle at 800 r/min to the rated speed at 2 500 r/min. The test results indicated that the torque initially increased and then decreased, as the speed increased within the entire speed range of the hydrogen engine, thus reaching the maximum of 147 N·m at 1 500 r/min. The maximum power of 36.8 kW was achieved at the rated speed of 2 500 r/min. The hydrogen consumption ranged between 90 and 95 g/(kW·h) under specific full-load conditions. The exhaust temperature also rose, as the speed and load increased. The coefficient of variation of the mean indicated pressure (COVIMEP) was highest at the rated power, but still only 5.36%, indicating stable engine operation. At the maximum torque operating point, the ignition timing was varied to analyze its impact on the combustion characteristics of the hydrogen engine. Once the ignition timing was advanced from -7.5 to -8.3 °CA, the combustion centroid was shifted earlier from 6.7 °CA after the top dead center (ATDC) to 6.1 °CA ATDC. The duration of the full combustion decreased from 13.4 to 12.6 °CA, whereas, the peak heat release rate increased from 67.3 to 72.0 J/(°CA). The process was more concentrated closer to the constant-volume combustion. The more intense in-cylinder combustion was then obtained to rapidly increase the in-cylinder pressure and temperature. The fuel combustion rate was accelerated to cause instability in the combustion process between cycles, which further increased the COVIMEP. Additionally, the ignition timing increased the crank angle duration of the in-cylinder temperatures above 1 800 K from 30.7 °CA to 33.1 °CA. The longer durations of the high in-cylinder temperatures were observed to increase the NOx emissions from 11.51 to 12.03 g/(kW·h). The operating condition was selected with the average maximum amplitude of pressure oscillations (MAPO) under external characteristic conditions (1 400 r/min, throttle fully open). The ignition timing was then varied to analyze the effect of the ignition timing on the knock characteristics. The ignition timing increased the average MAPO of the hydrogen engine from 0.015 to 0.020 MPa, and the peak in-cylinder pressure from 5.99 to 6.16 MPa. The individual knocking cycles revealed that the knocking depended mainly on the high in-cylinder temperatures, which induced the spontaneous ignition of unburned mixtures. The ignition timing caused more fuel to combust and release heat before the top dead center. The increasing degree of the constant-volume combustion raised the in-cylinder temperatures and pressures. The increasing tendency was found for the spontaneous ignition of the unburned mixtures, thereby increasing the knocking tendency of the hydrogen engine.