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Vegetable oils are a promising substitute for diesel fuel because their properties are similar to those of diesel. They are renewable and can be easily produced. Rudolph Diesel, the inventor of the diesel engine that bears his name, experimented with fuels ranging from powdered coal to peanut oil. Investigations were carried out to evaluate the performance of a conventional diesel engine with different operating conditions [normal temperature and pre-heated temperature] of waste fried vegetable oil in crude form and biodiesel form with varied injection timing and injector opening pressure. Raw oil, containing higher amount of Free Fatty Acids (FFA) (greater than 10 wt%) collected from local restaurants of Hyderabad was converted to biodiesel in two-stage method so as to reduce FFA to 0.52% wt%.