A two-stroke internal combustion engine has a crankshaft disposed at least in part in a crankcase, and a cylinder block connected to the crankcase and defining a cylinder. The cylinder defines at least one exhaust port for discharging exhaust fluid. A piston is movably disposed within the cylinder and is operatively connected to the crankshaft. The piston is movable along a cylinder axis in a reciprocating motion including an upstroke and a downstroke. An exhaust valve assembly is operatively connected to and rotates with the crankshaft. The exhaust valve assembly has a shaft rotatably supported by the cylinder block and a valve configured to cyclically obstruct the exhaust port. The valve is operable to move clear of the exhaust port before the piston uncovers the exhaust port during its downstroke, and at least partially close the exhaust port before the piston fully covers the exhaust port during its upstroke.