Biofuels are bio-origin renewable fuels which are capable of replacing mineral-based non-renewable fossil fuels. The use of biofuels which have oxygen molecules in its structure makes major variation in exhaust emissions in Compression Ignition Engines. Research works in the field of biofuels as alternative fuels for Internal Combustion Engines show a reduction in Unburned Hydrocarbons (HC), Carbon monoxide (CO), smoke and Particulate Matter (PM). However the emission level of Oxides of Nitrogen (NOx) increased in certain cases. The explanation for both reduction and increase in the emissions shows that the presence of oxygen molecules in the fuel is critical. The present work forms on the investigation of the performance and the exhaust emissions from a diesel engine with respect to the oxygen content in the alternative diesel fuels. Density and viscosity values of the alternative fuel maintained closer to the conventional diesel fuel to avoid the modifications in the fuel supply line. The secondary goal of the work is to replace maximum volume of the non-renewable fossil fuel by renewable and environmental friendly alternatives. Maximum replacement of diesel is possible because of the similarities in property values of the prepared alternative fuel with diesel. Comparison of performance and emission characteristics of the engine with conventional diesel fuel and with various blends of alternative fuels can indicate the effect of presence of oxygen in the fuels.