Experimental work was carried out to evaluate the performance, emission and combustion characteristics of a dual fuel engine with diesel as pilot fuel and methanol as inducted primary fuel. A single cylinder water cooled direct injection diesel engine developing a power output of 3.7kW at 1500 rev/min. was modified to work in the dual fuel mode. Tests were conducted at fixed loads such as 100%, 80%, 60% and 40% of the maximum power output with varying methanol induction rates. Brake thermal efficiency in dual fuel operation was better than normal diesel operation with methanol induction mainly at high power outputs. It increased from 30.3% with neat diesel to a maximum of 32.7% when methanol contributed about 44% of energy share. Smoke was reduced significantly with all methanol induction rates at all power outputs in dual fuel operation with diesel as pilot fuel. It was reduced from 3.8 BSU to 1.8 BSU with diesel at the maximum efficiency point at 100% load. NO emission was found lower in dual fuel operation at all loads and all methanol admission rates. This trend was noted mainly due to the reduction in the charge temperature due to vaporization of methanol. However, there was an increase in HC and CO emissions with methanol induction in dual fuel operation.Cylinder peak pressure and maximum rate of pressure rise were found as higher with methanol induction as compared to neat diesel operation mainly at high power outputs due to improvement in combustion. At low power outputs due to misfire peak pressure and maximum rate of pressure rise were reduced. Ignition delay and combustion duration were observed to be higher with methanol induction as compared to neat diesel operation all power outputs. Heat release rate resulted in improved premixed combustion phase with methanol induction mainly at high power outputs. However, at very high rates of methanol induction, premixed combustion phase became inferior due to misfire. It was concluded that diesel as pilot fuel and methanol as the inducted primary fuel could reduce smoke and NO levels significantly in a dual fuel engine with improved thermal efficiencies. However, care must be taken for controlling HC and CO emissions. In addition poor part load performance must be paid attention.