A non-linear compensator is investigated for handling of non-linear effects in diesel engines. This non-linear compensator is a non-linear state dependent input transformation that is developed by inverting the models for EGR-flow and turbine flow having actuator position as input and flow as output. The non-linear compensator is used in an inner loop in a control structure for coordinated control of EGR-fraction and oxygen/fuel ratio. A stability analysis of the open-loop system with a non-linear compensator shows that it is unstable in a large operating region. This system is stabilized by a control structure that consists of PID controllers and min/max-selectors. The EGR flow and the exhaust manifold pressure are chosen as feedback variables in this structure. Further, the set-points for EGR-fraction and oxygen/fuel ratio are transformed to set-points for the feedback variables. In order to handle model errors in this set-point transformation, an integral action on oxygen/fuel ratio is used in an outer loop. Experimental validations of the proposed control structure show that it handles nonlinear effects, and that it reduces EGR-errors but increases the pumping losses compared to a control structure without non-linear compensator.