The n-butanol/n-octanol fueled reactivity-controlled compression ignition engine was numerically studied based on the KIVA-CHEMKIN code. First, the knocking combustion characteristics were analyzed while functioning with a premixed n-butanol percentage of 20% (B20), since it exhibited the most severe knocking. Ten local regions were monitored to obtain local data, such as pressure and heat release rate. The local pressure oscillation was quantified by a band-pass filter. Second, the premixed n-butanol percentage and the intake valve close (IVC) timing were varied to investigate their effects on the combustion characteristics and emissions formations, as well as their potential for mitigating knocking. The results showed that a strong pressure oscillation was observed for B20 near the cylinder wall, which indicates severe knocking. This consequence is mainly caused by the low-temperature combustion of the n-octanol/n-butanol/air mixture near the cylinder-wall region. Increasing premixed n-butanol percentage and retarding IVC timing could result in an extended ignition delay, lowered peak pressure, and reduced maximum pressure rise rate (PRR). Condition B80 with an IVC timing of −126 °ATDC could improve the indicated mean effective pressure by 11.7% and reduce the maximum PRR by 63.4% when compared to condition B20.