In our previous paper, a new gas exchange concept termed divided exhaust period regulated two-stage (DEP R2S) system has been proposed. In this system, two exhaust valves in each cylinder are separately functioned with one valve feeding the exhaust mass flow into the high-pressure (HP) manifold, while the other valve evacuating the remaining mass flow directly into the low-pressure (LP) manifold. By adjusting the timing of the exhaust valves, the target boost can be controllable while improving the engine's pumping work and scavenging is attainable which results in better fuel efficiency from the gas exchange perspective. This paper will continue this study by adding an appropriate knock model to examine the benefits this concept could bring to the combustion phasing. The results at full load showed that under knock limited spark advance (KLSA) and fully optimized exhaust valve timing condition, the DEP R2S system benefited from lower pumping loss and better scavenging due to the reduced backpressure and improved pulsation interference despite suffering from reduced expansion ratio and expansion work. The combustion phasing was advanced across the engine speed which is mainly attributed to the reduced residual and the reduced requirement of gross indicated mean effective pressure (IMEP). The net brake-specific fuel consumption (BSFC) was observed to improve by up to 3% depending on the engine operating points. At part load, the DEP R2S system could be used as a mechanism to extend the “duration” of the exhaust valve. This will reduce the recompression effect of the exhaust residuals during the beginning and the end of the exhaust stroke compared to the original R2S model with late exhaust valve opening and early exhaust valve opening. In addition, increased internal exhaust gas recirculation (EGR) due to the increased overlap between the LP and the intake valve is also beneficial for the improved pumping mean effective pressure (PMEP) as the throttle can be further opened to reduce the corresponding throttling loss. The average net BSFC improvement is expected to be approximately 6–7%.