This work aims at coming across the practices needed to address and followed up for the effective utilization of Canola oil in compression ignition engine. Initially, 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 it as a fuel in a compression ignition engine. In the third phase of the study, engine test bench was developed with all suitable accessories. Instead of utilizing the neat form of canola biodiesel, an attempt was made to use the diesel and ethanol blends of canola biodiesel. First , variable load test was carried out with neat diesel and a blend containing 30% by volume of canola biodiesel , 30% by volume of diesel and 40% by volume of ethanol (D30-CBD30-E40) at standard injection timing ( i.e. 23obTDC). In the next phase of the work the standard injection timing of D30-CBD30-E40 blend was advanced and retarded by 2o crank angle. Engine test results claimed that, brake thermal efficiency of D30-CBD30-E40 with advanced injection timing was increased by 23.1% as compared with standard injection timing. Advancement of injection timing had the benefits of reduced hydrocarbon, carbon monoxide and smoke emission at the penalty of slight increment in oxides of nitrogen emission. Cylinder pressure and heat release rate also found to be on the improved side with advancement of fuel injection of D30-CBD30-E40 blend. Thus this work insights a detailed study over the canola fuel in terms of its usage, property analysis and effectiveness as a fuel for compression ignition engine. The work also briefed the effects of inclusion of high octane fuel like ethanol and impact of injection timing in the behavior of a compression ignition engine operated with non-petroleum based fuel.