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Renewable sources of energy need to be developed to fulfill future energy demands in areas such as the Maldives where traditional sources of raw materials are limited or non-existent. This paper explores the use of an alternative fuel derived from coconut oil that can be produced in the Maldives and can be used in place of diesel fuel. The main advantage of this particular fuel is that it is a highly saturated oil with a calorific value close to standard diesel fuel. The viscosity of the crude coconut oil is much higher than standard diesel fuel. To reduce the viscosity and to make the oil more suitable for conventional diesel engines methyl esters were produced using the transesterification process (1). The engine performed well on the coconut oil methyl esters although there was a small reduction in power consistent with the lower calorific value of the alternative fuel. Comparative performance data together with the emission levels for the two fuels are presented.