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Considerable amounts (400 ∼ 600 thousand tons) of waste vegetable oil in Japan are still flushed down the drain every year. Utilization of waste vegetable oil for diesel fuel leads to two advantages for environmental protection, to reduce CO2 emission from engines and to avoid water pollution of rivers. In this study, combustion characteristics of waste vegetable oil methyl ester (WME) are investigated in detail by not only engine test run but also observation of burning flames in a visual engine. As results indicate, WME shows rather better combustion state in the visual engine and lower smoke emission from a high-speed DI test engine than gas oil. Moreover, by emulsifying WME with water, further improvement of combustion and more than 18 % reduction of NOx emission is carried out.