Used oil analysis plays an important role in the field of engine development, considering that it can give brief idea about performance of lubricant/ oil being used, its compatibility with the system under considerations. At present, regular testing is done like elemental analysis using Inductive Coupled Plasma (ICP) which can give idea about wear elements and additive elements. But it does not give information on morphological characterization of particles.In present work, Environmental Scanning Electron Microscopy technique with EDAX detector is used for characterizing the used oil. Oil is filtered on suitable paper and the particles collected on paper are analyzed. This gives the information on morphology and size of particles, their elemental analysis and mapping so that the sources can be judged. Size of wear metal particle is very important factor as even few bigger size particles are more detrimental than large number of smaller particles. Another advantage is that small quantity of oil is required for analysis and this technique can be used at regular intervals in engine testing program. Case study of this work is presented in this paper.