Engine fueled with Jatropha biodiesel showed reduced nitrogen oxides, unburned hydrocarbons, and smoke emissions with a moderate increase in carbon monoxide emission at high loads. Increased by 16% fuel consumption at rated load was attributed to lesser by 10% heating value of biodiesel and decreased by 6% fuel conversion efficiency. Analysis of combustion characteristics revealed an earlier start of injection and shorter ignition delay of biodiesel. Resulting decrease in maximum rate of heat release and peak cylinder pressure was the main reason for reduced NOx emission. It was shown that cetane index determined by the ASTM D976 method is not a proper measure of the ignition quality of biodiesel.