This work aims at producing Canola oil from Canola seed, converting the Canola oil into its biodiesel and investigating the performance, emission and combustion behavior of a compression ignition engine using Canola biodiesel as fuel. In the first phase of the work, raw canola oil was obtained by mortar and pistil method of breaking the cell wall of canola seed in the presence of hexane solvent. In the second phase transesterification of canola oil was carried out using methanol as reacting agent and potassium hydroxide as catalyst. The extracted biodiesel was subjected to various standardization techniques and spectroscopic studies such as GC-MS (Gas Chromatography- Mass Spectroscopy), NMR (Nuclear Magnetic Resonance spectroscopy) and FTIR (Fourier transform Infrared Spectroscopy) for ensuring the feasibility of using as fuel in a compression ignition engine. In addition the stability analysis was made in blending the prepared Canola biodiesel with diesel and ethanol. In the third phase a single cylinder, water cooled, variable compression ratio compression ignition engine test bench was developed to study the performance, emission and combustion characteristics of canola biodiesel and its blend with diesel and ethanol. 30% by volume of canola biodiesel and neat diesel with 40% by volume of ethanol blend (D30-CBD30-E40) was found to be stable over a week. Hence the experiments were conducted using D30-CBD30-E40 at different injection timings such as 20obTDC, 23obTDC and 25obTDC under various load conditions to find the optimum timing. Engine test results showed increase in brake thermal efficiency with advanced injection timings and the observation indicated an average increase of 23.1% in brake thermal efficiency with D30-CBD30-E40 at the injection timing of 25obTDC as compared to neat canola biodiesel at 23obTDC at peak power output. Exhaust emissions such as hydrocarbon, carbon monoxide and smoke were decreased with slight increase in oxides of nitrogen emission with D30-CBD30-E40 at 25obTDC at all power outputs. Considerable improvements in cylinder pressure and heat release were noted at 25obTDC as compared to other timings with D30-CBD30-E40 as fuel. It was concluded that canola seed oil could be used as fuel in the esterified form without any problem in engines performance. D30-CBD30-E40 could be used as fuel with considerable improvement in engines behavior. The injection timing of 25obTDC could be recommended for optimal superior thermal efficiency and reduced HC, CO and Smoke emissions as compared to other injection timings.