A study on the combustion and exhaust emissions characteristics by using Emulsion Fuel in Diesel Engine is performed experimentally. In this paper, the experiments are performed at engine speed 1800rpm, emulsion fuel ratio is 0%, 5%, 10%, 15%, 20%, 25%, and main measured items are specific fuel consumption, NOx and Soot emissions etc. The obtained conclusions are as follows. 1) Specific fuel consumption increase maximum 19.8% at low load, but is not effected at full load. 2) NOx emissions decrease 30% in case of emulsion fuel ratio 25% at full load. 3) Soot emission decrease 58.9% in case of emulsion fuel ratio 25% at full load.