Vegetable oils can be directly used in compression ignition engines. However, their performance is slightly inferior to diesel. This is due to their high viscosity and carbon residue. The performance of vegetable oils can be improved by esterifying them. In this experimental work, performance, emissions and combustion characteristics of a single-cylinder, water-cooled, direct-injection diesel engine running on Jatropha oil and its methyl ester were evaluated and compared with diesel operation. With Jatropha oil, the maximum brake thermal efficiency was 25.6% compared with 29.4% with diesel. The thermal efficiency was 27.8% with the methyl ester of Jatropha oil. Smoke and particulate levels were higher with Jatropha oil than diesel. The methyl ester of Jatropha oil was better than the pure oil but it was still inferior to diesel. Hydrocarbon and carbon monoxide emissions were slightly higher with both Jatropha oil and its methyl ester than with diesel whereas NO levels were lower than with diesel. Ignition delay and combustion duration were longer and peak heat release rates were lower with Jatropha oil and its methyl ester than with diesel. Again the methyl ester of Jatropha oil was better. On the whole it is concluded that the methyl ester of Jatropha oil could be used unmodified in diesel engines with no major detoriation in performance. The long-term effects of this fuel have to be evaluated.