This study describes the development of performance and emission characteristics on partially stabilized zirconia (PSZ) coated diesel engine fuelled by biodiesel with cetane number enhancing additive of Di-tertiary-butyl peroxide (DTBP). Additive was added to biodiesel in 1% by volume. The biodiesel was prepared from palm oil using simple base catalyst transesterification process. Biodiesel with additive and petroleum diesel were used as the test fuels. The experiment was conducted on a single cylinder, four stroke, water cooled and direct injection coated engine and to determine the performance and emission characteristics of engine running on the test fuels. The results were compared to uncoated engine, running on test fuels. The thermal efficiency for biodiesel with additive fuel was found to be comparable to diesel fuel operation at part load and slightly higher at rest of the load in coated condition. Exhaust emission measurements showed that NOx levels could be significantly reduced using biodiesel with additive fuel compared to diesel fuel in the same experimental conditions. There was no significant improvement on performance and emissions (except HC and CO) of uncoated engine running on biodiesel with additive fuel. (C) 2017 Elsevier Ltd. All rights reserved.