A better realization of isothermal compression and expansion leads to higher efficiencies in compressors, compressed air energy storages (CAES) and Stirling engines. Today's reciprocating engines are characterized by high thermal resistance between the cylinder surface, the piston and the working gas which prevents isothermal compression and expansion. The research team has developed a process to significantly reduce the thermal resistance by liquid injection. This leads to sufficient heat flows during compression and expansion to realize a nearly isothermal process. A compressor test rig was developed to compress air from 3 bar to up to 20 bar. Isothermal efficiency, as the ratio between isothermal and actual compression work, was evaluated. Liquid injection only consumes 1–2% of the total compression work, while at the same time saving 10–15% of compression work. The gas temperature remains below 50 °C during the entire compression cycle. In future applications, intercoolers may be omitted, and pressure ratios per stage may be increased. This results in isothermal efficiencies up to 95% which were achieved at low rotational speeds of 30 rpm. Total energy savings of up to 10% can be expected for compressors. In addition to the application in reciprocating compressors, the liquid injection is also suitable for compressors and expanders used in compressed air energy storages and Stirling engines. Since both compression and expansion will be improved, the efficiency increase of compressed air energy storages and Stirling engines will be significantly higher. An acceleration of the process and its impact on the isothermal efficiency will be investigated in future studies.