This study presents the effects of fuel blends containing 5%, 10%, 15% and 20% of anhydrous ethanol in diesel oil with 20% of biodiesel (B20) on performance, emissions and combustion characteristics of a diesel engine. The engine was tested with its original configuration and in the lower brake specific consumption region, at 1800 RPM. The results showed that in-cylinder peak pressure and heat release rate increased with the use of ethanol. The use of ethanol increased ignition delay and decreased exhaust gas temperature. Brake specific fuel consumption increased with ethanol addition, and fuel conversion efficiency was not affected. Increasing ethanol content in the fuel caused decreased carbon dioxide (CO2), carbon monoxide (CO) and total hydrocarbons (THC) emissions.