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The ever increasing diesel consumption, rapid depletion of fossil fuels and environmental concern has prompted an intensive research of alternate fuels. Biodiesel proves to be a very promising alternative to diesel fuel. In this work ethyl ester of fish oil was prepared from waste parts of fish through transesterification process. Various properties such as viscosity, density, calorific value and flash point of biodiesel and biodiesel-diesel blends of different proportions were investigated. The properties of biodiesel were found to be similar to that of diesel. Engine performance and emission characteristics were examined in a single-cylinder, constant speed, and direct injection engine under variable load conditions. The test results showed no significant change in the engine performance and reduction of main noxious emissions such as CO, HC, NOX and smoke with the marginal increase of CO₂.