This paper describes the development of a computer simulation model for a single cylinder direct injection diesel engine for neat diesel operation, ethanol-diesel dual fuel operation in fumigation and dual injection mode, operating on conventional or low heat rejection version. The model which illustrates the simulation of the overall cycle consisting of compression, combustion, expansion, exhaust and intake processes also predicts the nitric oxide and soot emissions. In addition it also predicts the brake power, brake thermal efficiency, brake specific fuel consumption, maximum gas pressure and maximum gas temperature. The above model was validated using available experimental results. Subsequently the computer program was run for different operating conditions encompassing broad changes in several engine operating parameters. Comprehensive studies showed that a diesel engine fueled with ethanol under fumigation and dual injection modes resulted in an increase in power, improvement in brake specific energy consumption, reduction in nitric oxide emission and soot concentration. Further enhanced performance and emission characteristics have been observed for a dual injection operation as compared to the fumigation mode. In the low heat rejection mode, improved power output, slightly higher nitric oxide emission and lower level of soot formation was observed as compared to the conventional mode.