This work aims at investigating the effect of oxygen enriched combustion on engine’s performance, emission and combustion characteristics of a MO (Mahua oil) fueled diesel engine running at the rates speed of 1500 rpm at the rated power output of 3.5kW. The intake system was modified to accommodate excess oxygen supply into the intake air and a provision was mode to fix an electronic injector for injecting water along with the air. The amount of water injected was controlled by a micro processor unit. Initially experiments were conducted with neat diesel and neat MO as fuels under variable power output conditions. Subsequently experiments were followed with MO as fuel with different oxygen concentrations such as 22%, 23%, 24% and 25% by volume. The optimal oxygen concentration was found based on the engine’s BTE (brake thermal efficiency). At the optimal oxygen concentration water injection was done at 2%, 4% and 6% by mass and the experiments were repeated with MO as fuel under oxygen enrichment mode. Neat MO resulted in inferior performance and increased emissions of smoke, HC (hydrocarbon) and CO (carbon monoxide) emissions as compared to ND (neat diesel) at all power outputs at ambient oxygen concentration (i.e.21% by vol.). The maximum BTE was noted as 25.2% and 30.8% with neat MO and neat ND diesel respectively. However, oxygen enrichment increased the BTE with all concentrations and reached the maximum value of 27.5% at 24% oxygen enrichment at the maximum power output of 3.7 kW. The smoke, HC (hydrocarbon) and CO (carbon monoxide) emissions were significantly reduced with oxygen enrichment. At peak power output the smoke value was noted as 50% with 24% oxygen enrichment whereas it was 78% and 51% with neat MO and ND. However, oxygen enrichment increased the NO (nitric oxide) emissions at all concentrations. The maximum NO emission was noted as 276 ppm with neat MO and 497 ppm with ND and increased to a maximum of 445 ppm for the oxygen concentration of 23% with MO as fuel at the peak power output. Injection of water along with intake air reduced the NO emissions considerably. The NO was reduced to a minimum of 340 ppm for the 4% by volume of water injected at peak power output. Shorter ignition delay and combustion duration were observed with oxygen enrichment as compared to ambient oxygen operation. Water injection increased the ignition delay at all power outputs. The peak pressure and heat release rate were improved with oxygen enrichment as compared to neat MO operation. It was concluded that MO could be effective used as fuel in compression ignition engines by combusting it under oxygen enriched condition. The optimal oxygen concentration of 24% could be recommended for the highest BTE. However, the penalty in oxygen enrichment is the NO emission. Injection of water at the intake manifold could solve the problem of higher NO emissions. The optimal amount of water that could be injected without affecting the engines power and BTE could be recommended as 4% by volume. Keywords: Mahua Oil, Oxygen enrichment, Water Injection, Engine Performance, Emissions and Combustion.