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Dimethyl Ether (DME), the methanol analog to Diethyl Ether (DEE), was recently reported as a low emission, high quality diesel fuel replacement. Literature review indicates that significant work is not carried out with respect to its performance analysis and in regard to pollution levels. In the present work, the effect of DEE on the performance and emissions of a four-stroke direct injection diesel engine have been studied. Tests were conducted on the diesel engine with different blends of DEE and diesel as fuel. Test results show that 5 % DEE blend gives better performance and low emissions compared to other blends of DEE and diesel fuel. Hence, 5 % DEE can be blended with diesel fuel to improve the performance and to reduce emissions of the diesel engine.