UK engine output rose 7.5% year on year in 2016 to 2,545,608 units, the Society of Motor Manufacturers and Traders (SMMT) announced.
Production of 1,124,947 engines for the home market, up 32.1%, was a record.
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Exports fell 6.3% to 1,420,661 and the share of production for export from 64% to 55.8%.
Mike Hawes, SMMT chief executive, said: "It's fantastic to see engine manufacturing thriving here in the UK, with multi-million pound investments in plant and machinery coming to fruition.
"A record 44.2% of production last year was for British-built cars, vans, trucks and buses, reflecting not just the diversity of our vehicle manufacturing sector but its success as production volumes continue to grow."
