Oxygenated diesel fuel blends have advantages over regular diesel. Oxygenation significantly reduces particulate matter (PM) and reduces toxic gases such as CO, sulfur oxides (SOx), and, at times, nitrogen oxides (NOx) from tailpipe emissions. Ethanol, which is the oxygenate in E-diesel, is a renewable fuel that reduces the dependency of non-oil-producing countries on foreign petroleum. However, a major drawback with E-diesel is that ethanol is immiscible in diesel over a wide range of temperatures. Studies have revealed that biodiesel, which is another renewable fuel, can be used successfully as an amphiphile (a surface-active agent) to stabilize ethanol and diesel. Research also has revealed that ethanol -biodiesel -diesel (EB-diesel) fuel blend microemulsions are stable well below sub-zero temperatures and have shown equal or superior fuel properties to regular diesel fuel. Microemulsions of certain component concentrations have shown substantially increased lubricity without compromising the cetane numbers and energy values. Despite ethanol having a considerably lower energy value, cetane number, and lubricity value than biodiesel or diesel fuel alone, the heat of combustion and cetane numbers of the EB-diesel blends remained steady, without significant reduction. The minimal change of the heat of combustion suggested that microemulsions may be contributing to the overall combustion process in a positive way. This work has paved the way to formulate a new form of biofuel blend from renewable material-a blend that has energy values comparable to those of fossil fuels but also has superior lubricity and environmentally friendly characteristics.