In this paper, ethylene glycol n-propyl ether palm oil monoester (EGPEPOM) was synthesized through transesterification of refined palm oil and ethylene glycol n-propyl ether with sodium as the catalyst. Its chemical structure was characterized through Fourier transform infrared (FTIR) spectrometry, hydrogen atom nuclear magnetic resonance (H-1 NMR), and gel permeation chromatography (GPC) analyses. To investigate the engine performance of EGPEPOM, tests on a two-cylinder direct-injection (DI) diesel engine were conducted. Experimental results indicated that the chemical structure of EGPEPOM is consistent with theoretical analysis. In comparison to diesel fuel, the start of combustion was advanced and the peak cylinder pressure was decreased with the EGMEPOM fuel. Meanwhile, the brake thermal efficiency of EGPEPOM was improved. The smoke emission was decreased maximally by 37.5% with brake-specific CO (BSCO) emission reduced by 66.6%, brake-specific hydrocarbon (BSHC) emission reduced by 27.1%, and brake-specific NOx (BSNOx) emission reduced by 23.7%.