Research in alternative fuels for internal combustion engines is promoted due to an increase in cost and scarcity of fossil fuels. Among various possible options, fuels derived from triglycerides (vegetable oils/animal fats) are promising for the substitution of fossil diesel fuels. Vegetable oil poses some problems when subjected to prolonged usage in compression ignition engines because of high viscosity. By using slightly increasing injection pressure than designed one the performance of diesel engine increases by using preheated karanja oil. In the present research, experiments were designed to study the effect of reducing karanja oil's viscosity by increasing the fuel temperature, there by eliminating its effect on combustion of the engine. A single cylinder, 5 hp, four stroke, constant speed, water cooled, direct injection diesel engine typically used in stationary operation was used for the experiments. The acquired data were analyzed for various parameters, such as thermal efficiency and brake specific fuel consumption. While operating the engine on karanja oil (preheated and blends), performance were found to be very close to mineral diesel for lower blend concentrations. The preheated oil's performance was slightly inferior in efficiency due to low heating value. It can perform well in the unmodified engine for a long period of operation without any ignition problems. People from rural and undeveloped areas can use this oil for their agricultural engines without depending on the market and without modification of the whole engine, and at the same time they can reduce the requirement of diesel fuel from an outside market.