In response to the problems of slow combustion speed, difficult ignition and high emissions of ammonia-hydrogen fuel in internal combustion engines, the combustion speed and stability of the ammonia-hydrogen mixture were improved by increasing the intake oxygen concentration. This approach enhanced the power performance and thermal efficiency of internal combustion engines while simultaneously reducing emissions. CONVERGE software was used to conduct combustion simulations on the ignition-type internal combustion engine model, maintaining the ammonia-hydrogen molar ratio at 85% and 15%, and gradually increasing the oxygen proportion from 21% to 29%. The results show that as the oxygen concentration increases, the indicated mean effective pressure of the engine gradually rises and presents a linear trend. The combustion stability of the in-cylinder mixture improves, and the combustion duration shortens. With the increase in oxygen concentration, the peak temperature in the cylinder also rises, leading to an increase in nitrogen oxides (NOx) emissions. The indicated thermal efficiency of the internal combustion engine exhibits a trend of initially increasing and then gradually decreasing as the oxygen concentration rises. The thermal efficiency of internal combustion engines peaks at 40.13% when the oxygen proportion(Ω) reaches 27%. The research provides a reference for the practical application of ammonia-fueled internal combustion engines.