Biodiesel is an emerging alternative to fossil diesel for use in compression ignition engines. From environmental standpoint, an increase in nitric oxide (NO) emission from biodiesel fueled engine has been a major concern. Several investigations suggest the role of unsaturated methyl ester as a contributor to biodiesel-NO penalty. The chemical simplicity of biodiesel compared to fossil diesel makes their composition effects amenable to a systematic analysis. In this study, the effects of saturated palm and unsaturated karanja (Pongamia pinnata) biodiesels and their blends (Bio-mix) on compression ignition engine performance, combustion and NO emission are investigated. The combustion and emission characteristics of these fuels are compared with fossil diesel that the neat biodiesel fuels result in improved exhaust emissions except NO with a penalty in fuel economy. However, the use of biodiesel blends of palm and karanja resulted in reduction of the total unsaturated content to an extent of 40% relative to neat karanja. At this condition, a maximum decrease of 14% is observed in the exhaust NO concentration. This also corroborated with a reduction in measured iodine value of biodiesel samples.