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The impact of nano-additives with the diesel and biodiesel fuels is one of the current scopes of research with regards to the fuel modification techniques. Intensive research is underway to utilize the nano-additives judiciously without affecting our ecological environment. In the present work, the effects of nano-additives (Alumina and Carbon Nanotubes) blended biodiesel emulsion fuels on the performance, smoke, gaseous emission and combustion characteristics of a constant speed four stroke single cylinder direct injection diesel engine was investigated. It is recognized that emissions of nanoparticles from diesel engines is of great concern and that if this work demonstrates a performance benefit then further work will be focused on the health impact issues. Esterification and emulsification techniques were adopted to prepare the jatropha biodiesel and jatropha water-biodiesel emulsion fuels respectively. The whole investigation was carried out in five phases.