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In order to reduce NOx and smoke emissions of palm oil methyl ester (PME), the combustion characteristics and exhaust emissions for emulsified PME were investigated using a single cylinder DI diesel engine. As the results, stable emulsified PME can be obtained without adding any emulsifier like as emulsified rapeseed oil methyl ester (RME). Emulsified PME is able to reduce NOx and smoke emissions as emulsified RME. The optimum water mass fraction for emulsified PME is 15wt% with regard to the exhaust emissions. The ignition delay of emulsified PME with 15wt% water is almost the same as that of gas oil because of the higher ignitionability of PME. Due to the higher ignitionability and better combustion characteristics of PME, emulsified PME with 15wt% water has shorter ignition delay and lower NOx, HC, CO and smoke emissions compared with emulsified RME with 15wt% water.