The fundamental research on ignition and combustion characteristics of a new blended fuel (diesel/Hydrogenated Catalytic Biodiesel) was investigated in a constant volume combustion chamber. The ignition delay, initial ignition position and flame lift-off length were researched via natural flame imaging and broadband chemiluminescence under various ambient temperatures and oxygen concentrations. After that, the emissions characteristics of diesel and blending fuel of B20 were compared in a four-cylinder direct injection diesel engine. Results show that the ignition delay and flame lift-off length decrease with increasing blend ratio of Hydrogenated Catalytic Biodiesel in diesel fuel blends. The gap of flame lift-off length caused by different blend ratios became narrow when Hydrogenated Catalytic Biodiesel exceeds 20% under different oxygen concentrations indicating the effect of chemical properties of fuel on flame lift-off length is declining. Furthermore, the blending fuel of B20 has lower PM emission compared with pure diesel while fuel economy is quite similar.