A novel powder metallurgy (P/M) material with high wear resistance is developed in order to decrease the wear and lubricant-leakage of a diesel engine valve guide. The friction and wear tests of this material are conducted. It indicates that the wear resistance of the newly developed P/M material has been improved and much better than that of the formerly used alloy steel. Moreover, three different sealing structures are designed and theoretically analyzed with respect to the characteristic of hydrodynamic sealing. Through comparative experiments of component leakage and engine run-in for different valve guide structures, it proves that the structure with a machined sealing groove but not installed with a seal-ring cannot only reduce the specific lubricant consumption (SLC) of cylinder head, but also decrease the wear of valve stem and valve guide.