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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 the blend of Pyro oil obtained from pyrolysis of cashew nut shell and conventional diesel as fuel. A single cylinder water-cooled, diesel engine was used. The intake system of the engine was modified to accommodate excess oxygen in the incoming air. A separate oxygen cylinder was used for storing pure oxygen and supplying it along with intake air. Base line data was generated using diesel as fuel. Subsequently experiments were repeated with the blend of 40% of Cashew nut shell oil and 60% diesel by volume (called CSO40D60) at different oxygen concentrations such as 21%, 22% 23%, 24% and 25%. Engine performance, emission and combustion parameters were obtained at different power outputs and analyzed.