In this work, palm oil biodiesel (POBD100) with a cydo-octanol additive was employed in a constant speed diesel engine, and its effects on engine combustion, emission, and performance were studied. The biodiesel produced from palm oil by the conventional transesterification process, sodium hydroxide, and methanol were involved in the conversion of oil into biodiesel. The five fuels evaluated were neat palm oil biodiesel (POBD100), octanol blended with palm oil biodiesel by 10% volume (POBD90010), octanol blended with palm oil biodiesel by 20% volume (POBD80020), octanol blended with palm oil biodiesel by 30% volume (POBD70030), and petroleum diesel. The experimental results revealed that with the increased octanol fraction, the combustion was smooth. All the octanol and biodiesel blends provide earlier combustion when compared to neat palm oil biodiesel which leads to higher thermal efficiency, lower fuel consumption, lower peak pressure, and shorter ignition delay. All the emissions are reduced by the addition of cydo-octanol in palm oil biodiesel in all loads owing to the higher oxygen concentration of air/fuel mixtures and improved atomization. Based on the outcome of this study, palm oil biodiesel and cyclo-octanol blends can be employed as a potential alternative fuel for existing unmodified diesel engines owing to its improved combustion, emission, and performance characteristics.