Biodiesel can be considered as one of the alternative fuels for diesel engine vehicles in which the direct usage of biodiesel as a fuel is often restricted due to their high viscosity, poor atomization, incomplete combustion and carbon deposits on fuel injectors, more over biodiesels emits more NOx emissions owing to their high oxygen content. In order to reduce these effects biodiesel emulsion techniques have been used recently. This paper present the influence of adding Alumina nano particles to Karanja biodiesel emulsion fuel and study of performance and emission characteristics on a diesel engine. The investigations have been carried out in three phases on computerized single cylinder diesel engine using neat Karanja biodiesel (KBD), neat KBD emulsion fuel and Alumina blended KBD emulsion fuel. The KBD emulsion fuel has been prepared in the proportion of 93% KBD , 5% distilled water , 2% of surfactants (Span80 and Tween80) by volume to maintain hydrophilic-lipophilic balance. The Alumina nano particles are blended 50 ppm and 100 ppm doses with the KBD emulsion fuel systematically. The experimental results revealed that the influence of incorporating Alumina nano particles to KBD emulsion fuel has shown significant improvements in engine performance as well as reduction in the harmful emissions. Further, it has been observed that the emulsion fuels reduces the fuel consumption there by dependency on fossil fuels.