A revolutionary cooling system is designed for a multi-fuel rotary engine (200 cc, 40 hp). The patented cooling system includes a water cooled array of engine housings, an innovative rotor and hydrodynamic bearings set cooled with a secondary oil cooling system. The oil conduits, however, are incorporated into water jackets, therefore the heat is further transferred to the water flow. Numerous fins and ribs are utilized as deflectors in water jackets thus controlling water flow to carry heat from the “hot” side of the engine housing to the “cold” side, which minimize temperature differential over the housing as well as reducing peak temperature. Numerical simulation indicated hot spots and uneven temperature distribution issues were controlled in the water jackets. Testing the optimized water jackets as part of the cooling system was also shown in successful in controlling temperature, hot spots and cavitation on the rotary engine with multi-fuels testing, such as kerosene, JP-5, JP-8, alcohol, gasoline, and E85. The potential of applying current water cooling system in other rotary engines is feasible.