The use of diesel engines is increasing rapidly thanks to their superior fuel economy, higher efficiency and excellent reliability. The energy crisis of fossil fuel depletion, rising price of diesel and environmental degradation have triggered a search for clean, sustainable and alternative fuels for internal combustion engines. Biodiesel is one of the most promising and demanding alternative fuels because it is a biodegradable, non-toxic and renewable fuel. In the present work, an experimental investigation on the effect of injection timing on engine performance, emissions and combustion characteristics with coconut oil methyl ester (CME) was conducted in a high-pressure common-rail direct injection diesel engine. The tests were performed at constant speed of 2000 rpm and 50% throttle position operation. The test fuels included baseline diesel fuel and two different fuel blends of CME (B20 and B40). The injection timing was varied from −4 to 8 °ATDC (with two degree crank angle interval) measured from standard main injection timing of 2 °ATDC. It was found that the retarded injection timing caused a reduction in brake power, brake thermal efficiency and NOx emissions, while an increase in brake specific fuel consumption, brake specific energy consumption and smoke emissions. In terms of combustion characteristics, the results showed that injection timing has significant effects on variation in peak combustion pressure and heat release rate. Overall, the results revealed that the engine performance of CME fuel blends was comparable to that of conventional diesel and altering the injection timing resulted in a trade-off between engine performance and emissions.