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The present review aims to study the prospects and opportunities of introducing vegetable oils and their derivatives as fuels in diesel engines. A survey of recent studies and research on vegetable oil based fuels is given within the historical context. Fuel related properties are reviewed and compared with conventional diesel fuel. The use of neat vegetable oil (edible and/or non-edible), biodiesel and its blends in a diesel engine has been discussed. Performance and emission characteristics are highlighted. Suitability of different combustion chambers for diesel engine operation with vegetable oils is outlined. Techniques to decrease viscosities are discussed. Current developments on the use of vegetable oils and its blends, biodiesel and its blends in diesel engines are examined.