Producing and using renewable fuels for transportation is one approach for a sustainable energy future for the United States, as well as the rest of the world. Renewable fuels may also substantially reduce contributions to global climate change. In the transportation sector, ethanol produced from biomass shows promise as a future fuel for spark-ignited engines because of its high octane quality. Ethanol, however, is not a high-quality compression-ignition fuel. Ethanol can be easily converted through a dehydration process to produce diethyl ether (DEE), which is an excellent compression-ignition fuel with higher energy density than ethanol. DEE has long been known as a cold-start aid for engines, but little is known about using DEE as a significant component in a blend or as a complete replacement for diesel fuel. Dimethyl ether, the methanol analog to DEE, was recently reported to be a low-emission, high-quality diesel fuel replacement, but similar engine testing and process information on DEE is limited. To identify the potential of DEE as a transportation fuel, we conducted a comprehensive literature review of its utilization in engines and also conducted limited laboratory experiments. This paper presents the findings on fundamental engine and emissions performance of DEE, along with an estimated cost of producing DEE from biomass ethanol.