Internal combustion engines are still widely used for propulsion in modern vehicles. Upcoming emission legislation imposes stricter limits on exhaust emissions. One method to achieve emission compliance is by using a three-way catalyst (TWC), which offers excellent emission reduction if the mixture is stoichiometric. However, stoichiometric mixtures in spark-ignited engines have the drawback of increased knock propensity. Knock can be mitigated by using water injection, which serves as both a diluent and utilizes latent heat to reduce the temperature, thereby reducing the reactivity of the unburned mixture. Methanol as a fuel has received more attention thanks to its high research octane number (RON) and its potential to contribute to decarbonization when produced as e- or bio-methanol. In the current study, Direct Water Injection (DWI) was evaluated on a Heavy-Duty (HD) single-cylinder research engine fueled by methanol. This work aims to fill a research gap on methanol-fueled engines with water injection. A direct injection system of water was chosen as it offers the freedom to inject during the closed cycle. Furthermore, a chemical kinetic study on the oxidation of stoichiometric methanol–water mixtures was conducted based on findings in the literature suggesting that, under certain conditions, water mixed with alcohol (in this case, ethanol) can reduce the ignition delay. The experimental results demonstrate that DWI effectively suppresses knock and reduced Nitrogen Oxides (NOx), albeit with deteriorated combustion efficiency. The chemical kinetic study suggested that at lower to intermediate temperatures, water acts as an efficient third-body collider, which lowers the ignition delay. However, this effect is not significant for the typical timescales encountered in HD engines.