This paper’s analysis approach combines the orthogonal array design of experiments with grey relational analysis for optimization CI engine performance using blend of Madhuca Indica biodiesel as a fuel. Grey relational theory is adopted to determine the best input parameters that give lower emission and higher performance of CI engine. Five design parameters namely; compression ratio, injection pressure, injection nozzle geometry (no. of holes on nozzle of injector), additive (AA-93 TM) and fuel fraction were selected, and four levels for each factor. To reduce an experimental effort the experiments have been performed by employing Taguchi's L16 orthogonal array for various engine performance and emission related responses. Injection nozzle geometry was found to most influencing factors. The optimal combination so obtained was further confirmed through experimentation was suitable for optimizing the performance and emission parameters of diesel engine. The optimal combination of the input parameters in CI engine operated on Madhuca indica biodiesel blend is: Compression ratio (CR) 18, fuel injection pressure (FIP) 310 bar, injection nozzle geometry (ING) 3H, fuel fraction (FF) 15% and without additive (ADD).