Flue gas recirculation (FGR) is an effective method to reduce NOx emissions from the combustion of fuels, such as natural gas. Nitrogen, carbon dioxide, and water are the main components of flue gas. Nitrogen is an inert gas, and water can be condensed out of the effluent before FGR. However, recycled CO2 can alter the physical and chemical combustion characteristics of a fuel. This research investigated the effects of CO2 on CH4/air laminar diffusion flames, both experimentally and numerically. Experiments used laser-induced fluorescence to measure OH and CH distributions in the resulting flames, at different CO2 concentrations. Numerical methods were used to investigate the reaction mechanism and predict temperature and species concentration fields, as well as the NOx formation. Experiments showed that the CH fluorescence intensities decreased with the addition of CO2, while the OH fluorescence intensities increased. Both the directed relation graph method and the sensitivity analysis method were used to reduce the GRI-mech 3.0 mechanism. The chemical kinetics of methane combustion were analyzed using the reduced mechanism with the diffusion opposed-flow flame model in the chemkin 4.1 software package to determine the main reactions among the major species. Numerical simulations showed that as the amount of CO2 in the fuel increased, the concentration of CH decreased. These CFD simulations using the reduced mechanism were in agreement with the experimental data. Thus, the reduced mechanism was then used to predict NO concentrations. Numerical simulations showed that as the amount of CO2 in the fuel increased, the concentration of CH decreased, and, as a result, lower amounts of NO were predicted.