Vegetable oils are a promising alternative among the different diesel fuel alternatives. However, the high viscosity, poor volatility and cold flow characteristics of vegetable oils can cause some problems such as injector coking, engine deposits, filter gumming, and piston ring sticking and thickening of lubrication oil from long-term use in diesel engines. These problems can be eliminated by transesterification of the vegetable oils into Biodiesel. The experiment was conducted on a single cylinder, water cooled direct injection (D.I) diesel engine with Pungamia methyl ester (PME) diesel blend such as B10, B20 and B100 as fuel for diesel engine. The results showed that the brake thermal efficiency decreased and BSFC slightly increased for Pungamia methyl ester blends as compared with diesel fuel. It is also seen that the carbon monoxide (CO) and smoke emissions were slightly reduced and the nitrogen oxide (NO) emission was increased about for B20 blend. The cylinder pressure and heat release rate are closer to diesel fuel for the 20% blend compared with diesel. On the whole, it is concluded that the 20% Pungamia methyl ester can be used as diesel fuel without any engine modificat0ions. © EuroJournals Publishing, Inc. 2012. © 2012 Elsevier B.V., All rights reserved.