Main Features - TECHNOLOGY

Grand Theft Auto 4 runs on Rockstar's proprietary next generation game engine, R.A.G.E., allowing for an unprecedented level of realism and interactivity.
New sunlight and weather effects which give the city a whole different appearance as the time of day progresses.

New volumetric lighting effects are evident in this screenshot. Volumetric lighting effects allow sunlight to stream realistically into dusty interiors. Police spotlights will likely benefit from this effect as well when helicopters kick up debris.

Normal (bump) maps will provide much more detail in models than the underlying polygons, as well as giving materials more texture and depth.
Road and building textures are more varied than in previous GTAs. On some roads you will find potholes, metal plates (etc) where the road has been dug up.
Modern pixel shaders give water, glass, cars, etc.. more realistic reflections and shininess than the earlier games.

In cars, you can see real reflections on the rear and side-view mirrors.
There are no load times in GTA4, not even during exterior-interior transitions (and vice versa.)

GTA4 uses euphoria, a fully procedural animation package created by NaturalMotion. The core technology is the Dynamic Motion Synthesis (DMS) system.
Characters have the ability to hang on to the back of vehicles. Variations in the terrain are met with realistic changes in the walking animation.
Unique game moments. Animations are created on the fly, so each player's experience will be unique. Gamers are no longer subjected to pre-recorded animations.
Characters will react realisticaly to being hit with gunfire, cars, and melee weapons or fists.

Players will be able to push people out of the way, rather than "floating" past them as in older games.

Falling/thrown characters will react as in real life- They won't simply be limp, lifeless ragdolls. Nor will they use a canned "super hero" animation like before.
Characters (and players?) will be able to hang on to helicopters and trucks, which will swing them around as the vehicle moves.