To address the problem of a piston-valve collision associated with poppet valve engines, we replaced the conventional poppet valve with a solenoid operated stepping valve whose motion is perpendicular to that of the piston. The valve events are software controlled, giving rise to precise intake/exhaust cycles and improved engine efficiency. Other rotary engine models like the Coates engine suffer from sealing problems and possible valve seizure resulting from excessive frictional forces between valve and seat. The proposed valve on the other hand, is located within the combustion chamber so that the cylinder pressure help seal the valve. To minimize friction, the valve clears its seat before stepping into its next position. The proposed system was successfully simulated using ALTERA's QUARTUS II Development System. A successful prototype was built using a single piston engine. This is an ongoing project to eventually produce a 4-cylinder engine.