For security and logistical convenience, the single fuel forward policy hopes to use a single kerosene fuel to replace a variety of military fuels, especially the unsafe gasoline. However, the performance of kerosene-fueled spark ignition (SI) engines is severely restricted by knock, slow combustion rate, and poor combustion stability. This work innovatively applies cooled exhaust gas recirculation (EGR) combined with prechamber jet ignition (PJI) to a kerosene-fueled engine to suppress knock and improve performance. The results show that applying cooled EGR at a fixed throttle opening can suppress knock and improve fuel economy. However, the power decreased due to the decreased intake of energy. While applying EGR with constant fresh air mass flow makes the knock more prominent because of the microboosting effect caused by the increased throttle opening. This indicates that cooled EGR alone cannot improve the power output. Moreover, combustion instability was also caused due to the slower combustion rate. Therefore, PJI was introduced to compensate for the negative impact of EGR. As a result, a synergistic effect of cooled EGR and PJI was discovered, improving the IMEP by 5% and reducing the ISFC by 4.9% compared to the baseline. The PJI can shorten the combustion duration and improve the combustion stability because of the high kinetic energy jet and high turbulence flame. In addition, a novel two-stage heat release process which includes the unusual first-stage low-temperature heat release was discovered. Overall, EGR dominates the knock suppression, and PJI contributes to the combustion rate improvement.