Present work deals with the development of butanol-diesel-biodiesel blends to substitute for petrodiesel. These blends were tested for physical stability and various fuel properties conforming to ASTM standards. Subsequently engine performance and emission tests were conducted with each blend. Observations revealed the blends to be thermally and physically stable, and they showed good resemblance to the properties of diesel, with the exception of flash point only. Brake power showed marginal decrease and fuel consumption an increase in the range of 4.9%-10.7% as compared to diesel for identical performance. Exhaust gas temperature showed a drop in the range of 3.3%-9.4% due to quenching effect of butanol, whereas brake thermal efficiency showed a reduction of 6.3%-10 to to that over petrodiesel. Exhaust gas emissions showed a significant decrease in CO (42%) at medium and higher loads, whereas NO showed an average increase of 2.4%-11% as compared to diesel.