Diesel engines are widely used as the power sources for mass transportation and industrial power plants. However, they generate undesirable exhaust emissions like NOx,CO,HC, particulates, smoke, etc.,which are hazardous to human health as well as ecological environment. Emulsification is the technique which is used to reduce the exhaust emissions thereby increasing the fuel economy and combustion in engines.In this study, the blended fuel was prepared by mixing diesel and diethylene glycol dimethyl ether (diglyme). A single cylinder vertical air cooled diesel engine was tested by usingblended fuel at a constant speed of 1500 rpm under variable load conditions. Thus, the performance parameters, combustion characteristics and emission levels were analyzed and compared with pure diesel engine operation. The results obtained from the tests indicated significant reductions in emission levels of CO, HC and smoke but showed increase in the level of NOx. In order to reduce the NOx emissions, the emulsified fuel was prepared. © Research India Publications.