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Fuel crisis and environmental concerns have led to look for alternative fuels of bio-origin sources such as vegetable oils, which can be produced from forests, vegetable oil crops and oil bearing biomass materials. Vegetable oils have energy content comparable to diesel fuel. Straight vegetable oils posed several operational problems and durability problems when subjected to long-term usage in CI engine. These problems are attributed to higher viscosity and lower volatility. The viscosity can be brought in acceptable range by (i) converting the vegetable oil into methyl ester, (ii) blending of oil with diesel fuel, (iii) blending of oil with alcohols or (iv) increasing the fuel temperature to over 200°C using exhaust gas waste heat. Reduction of viscosity by blending or exhaust gas heating saves the chemical processing cost of transesterification.