The rising cost and limited availability of crude oil in international market has provided an opportunity to look for substitute of fossil fuel. Scientists all over the world are experimenting on variety of renewable fuels for meeting the future energy demands. Bio origin fuels are fast becoming potential alternative resources to replace the fossil fuels. The vegetable oils, derived from oil seed crops have got 90 to 95% energy value of diesel on volume basis, comparable cetane number and can substitute upto 20% (v/v) of diesel fuel. Mahua seed oil is common ingredient of hydrogenated fat. Two-step transesterification process was employed to synthesize biodiesel from Mahua Oil (Madhuca-indica) and analysis of Physico-chemical properties as well as the combustion, performance and emission characteristics was done by taking 10, 20 and 100 % blend with diesel. The physico-chemical properties of the blends were found to be comparable to diesel. Engine performance like Brake Thermal Efficiency (BTE) decreased slightly for all the blends of mahua oil methyl ester. At full load condition CO emission was 38% lower while NOx was found to be 21 % higher than that of neat diesel. HC emission was 42 ppm for pure mahua biodiesel and 58 ppm for diesel fuel. Smoke opacity for all the blends of mahua oil methyl ester was lower than mineral diesel. Combustion result shows ignition lag for all the blends of mahua oil methyl ester. Ignition delay for D100 is found at 10.5° while for neat mahua oil methyl ester it is 7°. However for M10 and M20 ignition delay varied from 7.3°, and 8° respectively. On an overall analysis it can be concluded that upto 20 % (v/v) of diesel can be easily substituted by mahua oil biodiesel and can be run on an unmodified single cylinder diesel engine.