This study aimed at developing a new skeletal mechanism for LPG fuel capable of predicting combustion in a wide range of engine operating conditions with high fidelity. A novel reduction schematic was developed and applied to the Lawrence Livermore National Laboratory (LLNL) detailed mechanism (980 species, 4972 reactions) concerning NOx and soot formation as well. A two-level reduction method was used in which each level included Direct Relation Graph Error Propagation (DRGEP), DRGEP with isomer lumping, and DRGEP with sensitivity analysis. As a result, the skeletal mechanism was obtained with 88 species and 727 reactions and was successfully verified by comparing the results of the ignition delay/temperature and laminar flame speed/equivalence ratio for the combustion of propane, butane, and fuel mixture (90% propane/10% butane) with the experimental data. The obtained discrepancy of the ignition delay/temperature curves for the fuel mixture was around 5%. Additionally, a zero-dimensional engine calculation was conducted, and the results indicated that the mechanism was successful in predicting the engine combustion pressure with an error of around 5%.