In the present experimental investigation, Waste cooking oil (WCO) biodiesel was prepared by employing a single-stage transesterification technique using 2.1 grams of NaOH and 65 ml of methanol at a molar ratio of 1:8, at 60 °C for a 75-minute reaction duration, yielding 11.75 liters of WCO biodiesel. Fe<inf>2</inf>O<inf>3</inf> nanofluid was prepared using the ultrasonication technique at 60 Hz and 600 rpm for 45 minutes, using deionized ethanol and Sorbitan monooleate solution. The physicochemical properties, including kinematic viscosity, density, calorific value, flash point and fire point, ash content, and cetane index, were found to be within ASTM limits. SEM and stability analyses on Fe<inf>2</inf>O<inf>3</inf>-suspended diesel-WCO biodiesel blend were also conducted. The test fuel blends of D70WCOB30 and D70WCOB30 with 50 ppm, 100 ppm, and 150 ppm of Fe<inf>2</inf>O<inf>3</inf> nanoparticles were prepared separately and tested in a CI engine. The performance test clearly showed that D70WCOB30 Fe2O3 NP100 (80% of diesel and 20% of WCOB with Fe<inf>2</inf>O<inf>3</inf> nanoparticle doping at 100 ppm) fuel blend produced superior Brake Thermal Efficiency (BTE) and lower Brake Specific Fuel Consumption (BSFC) due to higher calorific value. D70WCOB30 Fe<inf>2</inf>O<inf>3</inf> NP100 emitted lower amounts of Unburned Hydrocarbon (UBHC) and CO, whereas the NO<inf>x</inf> emissions were notably higher. Lower smoke emissions were seen in a diesel-biodiesel blend with a 50-ppm nanoparticle concentration. The combustion characteristics, including in-cylinder pressure and heat release rate, were positively influenced by the addition of nanoparticles. Overall, the D70WCOB30 Fe<inf>2</inf>O<inf>3</inf> NP100 fuel can be used in an unmodified CI engine as a sustainable alternative. © 2025 Elsevier B.V., All rights reserved.