Global warming due to increasing pollution and rapid depletion in petroleum reserves has given us opportunity to find bio fuels. Biodiesel is an alternative diesel fuel that can be produced from renewable feedstock such as edible and non-edible vegetable oils, waste frying oils, and animal fats. Biodiesel is an oxygenated, sulphur free, non-toxic, biogradable, and renewable fuel. The diesel performance and emission characteristics depend upon the fuel properties such as cetane number, density, low caloric value, and kinematic viscosity. In this experiment, 12 cylinders, 780hp CIDI military diesel engine performance and emission characteristics from non-edible karanja oil methyl ester (KOME) biodiesel and diesel fuel were compared by applying EGR with supercharging. The test results showed that the engine performance of karanja oil methyl ester biodiesel fuel was similar to that of diesel fuel. KOME biodiesel fuel with 20% EGR rate has produced lower exhaust emissions including 23% lower NOx emission and slightly lower fuel consumption as compared to diesel fuel with 0% EGR rate.