An EGR equipped internal combustion engine is controlled to maximize the beneficial effects and minimize the detrimental effects of EGR on engine operation. Specifically, at least one parameter indicative of the O2 concentration in the intake mixture and/or at least one parameter indicative of the H2O concentration in the intake mixture is monitored, and the monitored parameter is relied on to control one or more aspects of engine operation by open loop adjustment of other control strategies and/or by a separate closed loop control strategy. These controls are applicable to virtually any engine, and are particularly beneficial to lean burn engines such as diesel (compression ignition) engines, spark ignited natural gas engines, and dual fuel or other compression ignited natural gas engines. The engine may be equipped with either actively controllable EGR or passive and uncontrolled EGR.