The international marine shipping industry is responsible for the transport of around 90% of the total world trade. Low-speed two-stroke diesel engines usually propel the largest trading ships. This engine type choice is mainly motivated by its high fuel efficiency and the capacity to burn cheap low-quality fuels. To reduce the marine freight impact on the environment, the International Maritime Organization (IMO) has introduced stricter limits on the engine pollutant emissions. One of these new restrictions, named Tier III, sets the maximum NOx emissions permitted. New emission reduction technologies have to be developed to fulfill the Tier III limits on two-stroke engines since adjusting the engine combustion alone is not sufficient. There are several promising technologies to achieve the required NOx reductions, Exhaust Gas Recirculation (EGR) is one of them. For automotive applications, EGR is a mature technology, and many of the research findings can be used directly in marine applications. However, there are some differences in marine two-stroke engines, which require further development to apply and control EGR. The number of available engines for testing EGR controllers on ships and test beds is low due to the recent introduction of EGR. Hence, engine simulation models are a good alternative for developing controllers, and many different engine loading scenarios can be simulated without the high costs of running real engine tests. The primary focus of this thesis is the development and validation of models for two-stroke marine engines with EGR. The modeling follows a Mean Value Engine Model (MVEM) approach, which has a low computational complexity and permits faster than real-time simulations suitable for controller testing. A parameterization process that deals with the low measurement data availability, compared to the available data on automotive engines, is also investigated and described. As a result, the proposed model is parameterized to two different two-stroke engines showing a good agreement with the measurements in both stationary and dynamic conditions. Several engine components have been developed. One of these is a new analytic in-cylinder pressure model that captures the influence of the injection and exhaust valve timings without increasing the simulation time. A new compressor model that can extrapolate to low speeds and pressure ratios in a physically sound way is also described. This compressor model is a requirement to be able to simulate low engine loads. Moreover, a novel parameterization algorithm is shown to handle well the model nonlinearities and to obtain a good model agreement with a large number of tested compressor maps. Furthermore, the engine model is complemented with dynamic models for ship and propeller to be able to simulate transient sailing scenarios, where good EGR controller performance is crucial. The model is used to identify the low load area as the most challenging for the controller performance, due to the slower engine air path dynamics. Further low load simulations indicate that sensor bias can be problematic and lead to an undesired black smoke formation, while errors in the parameters of the controller flow estimators are not as critical. This result is valuable because for a newly built engine a proper sensor setup is more straightforward to verify than to get the right parameters for the flow estimators.