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Biodiesel developed from non- edible seeds grown in the wasteland in India can be very effectively utilized in the existing diesel engines used for various applications. This paper presents the results of investigations carried out in studying the fuel properties of mahua oil methyl ester (MOME) and its blend with diesel from 20% to 80% by volume. These properties were found to be comparable to diesel and confirming to both the American and Indian standards. The performance of mahua biodiesel (MOME) and its blend with diesel in a Kirloskar DAF8 engine has been observed. The addition of MOME to diesel fuel has significantly reduced CO, UBHC and smoke emissions but increases the NOx emission slightly. The reductions in exhaust emissions could help in controlling air pollution. The results show that no significant power reduction in the engine operation when operated with blends of MOME and diesel fuel.