Feasibility of using high percentage of ethanol in diesel-ethanol blends, with biodiesel as a co-solvent and properties enhancer has been investigated. The blends tested are D70/E20/1310 (blend A), D50/E30/B20 (blend B) D50/E40/B10 (blend C), and Diesel (D100). The blends are prepared to get maximum percentage of oxygen content but keeping important properties such as density, viscosity and Cetane index within acceptable limits. Experiments are conducted on a multicylinder, DI diesel engine, whose original injection timing was 13 degrees CA BTDC. The engine did not run on blends B and Cat this injection timing and it was required to advance timing to 180 and 21 CA BTDC to enable the use of blends B and C respectively. However advancing injection timing almost doubled the NO emissions and increased peak firing pressure. The P-0 and net heat release diagrams shows that the combustion process of these blends delayed at low loads but approaches to the diesel fuel at high loads. The comparison of blend results with baseline diesel showed that brake specific fuel consumption increased considerably, thermal efficiency improved slightly, smoke opacity reduced remarkably at high loads. NO variation depends on operating conditions while CO emissions drastically increased at low loads. Blend B which replaced 50% diesel and having oxygen content up to 12.21% by weight has given satisfactory performance for steady state running mode up to 1600 RPM however, it does not showed any benefit on peak smoke emission during free acceleration test. (C) 2011 Elsevier Ltd. All rights reserved.