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This paper aims at studying the effect of oxygen enriched combustion on performance, emission and combustion characteristics of a diesel engine using waste cooking oil (WCO) derived from palm oil as fuel. A single cylinder water-cooled, direct injection diesel engine was used. The intake system of the engine was modified to accommodate excess oxygen in the incoming air. Base data was generated using diesel as fuel. Subsequently experiments were repeated with WCO for different oxygen concentrations such as 21% (WCO+21%O2), 23% (WCO+23%O2), 24% (WCO+24%O2) and 25% (WCO+25%O2) by volume. Engine performance, emission and combustion parameters were obtained at different power outputs and analyzed. Results showed reduced brake thermal efficiency, higher smoke, hydrocarbon and carbon monoxide emissions with WCO+21%O2 as compared to diesel at all power outputs. The brake thermal efficiency was found as 26.2% with WCO+21%O2 where as it was 30.5% with diesel at the rated power output of 3.7 kW.