The biodiesel fueled diesel engine results in lower thermal efficiency due to lower volatility and slightly higher viscosity of the biodiesel. Hence, in this work, an attempt was made to enhance the efficiency of a biodiesel operated diesel engine by preheating the biodiesel using hot exhaust gases. In the present work, biodiesel was derived from non-edible and underutilized mahua oil by transesterification. From the property analysis, it was found that the viscosity of the mahua oil biodiesel (MOB) is slightly higher than the diesel. Hence, in the present work, the MOB was preheated in a preheater using hot exhaust gases. The engine tests were carried out on a single cylinder, direct injection diesel engine, most widely used in agricultural machinery. From the engine test analysis, it was observed that the preheated mahua oil biodiesel (PMOB) fueled diesel engine results in higher thermal efficiency and lower CO, HC, and smoke emissions as compared to the MOB. But the NOx emission of the engine fueled with PMOB was higher than the MOB. From this work, it is concluded that the efficiency of the biodiesel fueled diesel engine can be enhanced by preheating using hot exhaust gases.