An experimental study is conducted to evaluate diesel engine performance when fuelled by vegetable oils. A single cylinder, naturally aspirated diesel engine was used in this investigation. The effects of injection nozzle orifice size on engine performance was evaluated. It was found that operation with vegetable oils can limit maximum power output of engine but it can be increased to baseline value by increasing nozzle orifice sizes. Except for limitation on power, engine performance with peanut oil was found to be comparable to performance with diesel fuel for a given nozzle. Larger orifice sizes resulted in increased smoke and unburned hydrocarbon emissions.