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In Japan, about 750 million liters of lubricating oil from automobiles and marine engines become waste per year. The authors propose a plan to convert such used lubricating oil (ULO) to effective energy. In detail, some special diesel generator plants should be built and ULO should be burned there after some process. This plan has at least two advantages, i.e. to save the petroleum energy and to avoid the environmental pollution. Aim of this study is to develop the way to utilize ULO for diesel fuel at such a generator plant. Combustion characteristics of ULO are in detail investigated by observation of burning flames in a visual engine and by engine test run. As results of comparison between ULO and heavy fuel oil (HFO), ULO shows rather better ignition quality in the visual engine and lower smoke emission from the running test engine than HFO.