The paper presents a comparative analysis of the operational parameters, smoke emission and the content of toxic components in exhaust gases of a compression ignition engine fuelled with fossil diesel, commercially available biodiesel (fatty acid methyl ester) and their 50%/50% blend. The study was carried out using a diesel engine equipped with an in-line injection pump used in delivery vans. An indirect injection, considerably worn engine was chosen because such engines are very often fuelled with the less expensive biodiesel. Measurements were made on an engine operated at different rotational speeds under full load as well as using the European Stationary Cycle (ESC) test. Emissions of regulated and non-regulated compounds were measured with the use of the Fourier-Transform Infrared (FTIR) analytical system, which provided concentrations of 23 exhaust gas components. The results showed that the use of commercially available biodiesel instead of diesel fuel did not considerably reduce engine performance. However, increased fuel consumption was noted. The biggest differences between the fuels were observed in the case of smoke and CO emissions, which were substantially lower for the engine fuelled with biodiesel. The study indicated that the environmental effect of the fuel used was not only different for various toxic components but also depended on engine operating conditions.