A stabilized diesel-methanol blend was realized and a study on the performance and emissions of the diesel-methanol blend was carried out in a compression ignition engine. The study showed that the engine thermal efficiency increases and the diesel equivalent b.s.f.c. decreases with increase in the oxygen mass fraction (or methanol mass fraction) of the diesel-methanol blends due to an increased fraction of premixed combustion phase, oxygen enrichment and improvement in the diffusive combustion phase. Further increase in the fuel delivery advance angle will achieve a better engine thermal efficiency when the diesel engine is operated using the diesel-methanol fuel blends. A marked reduction in the exhaust CO and smoke can be achieved when operating with the diesel-methanol blend. There is not a large variation in the exhaust hydrocarbon with the addition of methanol in diesel fuel. NOx increases with increase in the mass of methanol added; methanol addition to diesel fuel was found to have a strong influence on the NOx concentration at high engine loads rather than at low engine loads, and a flat NOx-smoke trade-off curve exists when operating with the diesel-methanol fuel blends.