India imported about 2/3rd of its petroleum requirements which involved a cost of approximately Rs. 80, 000 crores in foreign exchange. Even 5% replacement of petroleum fuel by bio-fuel can help India save Rs. 4000 crores per year in foreign exchange. The country has been hit hard by the increased cost and uncertainty and so is exploring other energy sources occurring bio-diesel extracted from trees is one such alternative under consideration. Bio-diesel would be cheap to produce as it can be extracted from certain species of tree that are common in many parts of India. However, as the biodiesel is produced from vegetable oils and animal fats, there are concerns that biodiesel feedstock may compete with food supply in the long-term. Hence, the recent focus is to find oil bearing plants that produce non-edible oils as the feedstock for biodiesel production. Citronella oil is used as an input for biodiesel production via transesterification. Diesel fuel is much higher use than any other gasoline fuels because diesel engines have many adaptable domestic uses like small irrigation water pumbing systems, light weight four/two seated auto cab and car engine small electricity generators etc. Citronella biodiesel fuel properties are observed and tested in the fuel testing laboratory with standard procedure. Then an experimental set up is construct to study the performance of a small Kirloskar Diesel in the internal combustion engine by using different blends of Citronella Oil based biodiesel under different Operation Conditions. We have to determine the optimum performance of this citronella biodiesel. NOx emission from the test engine can be measured by chemical luminescent detector type NOx analyzer. © 2006-2014 Asian Research Publishing Network (ARPN). © 2014 Elsevier B.V., All rights reserved.