This research focused on utilizing the waste plastic oil (WPO) effectively in a light-duty direct injection (DI) diesel engine that is predominantly used in the Indian agricultural sector. This approach is critical from the environmental perspective as it provides a solution to two major issues: (1) waste plastic management, which is a challenge for municipalities across the world and (2) reduction of diesel dependency using fuel derived from waste plastic as an alternative fuel for diesel engines. For this purpose, WPO was extracted from mixed waste plastic via catalytic pyrolysis in a lab-scale extraction unit. Later, the effects of oxygenated, renewable n-hexanol addition with baseline diesel and WPO were investigated. Three ternary blends were prepared by splash blending n-hexanol with WPO and diesel: (1) D50-W40-H10, (2) D50-W30-H20, and (3) D50-W20-H30. The performance and tailpipe emission characteristics of DI diesel engine when fueled with these ternary blends were then analyzed in comparison with both neat WPO and diesel operation. Results indicated that D50-W20-H30 presented lower NOx and smoke emissions with 1.5 and 22.8% against diesel and 7.22 and 76.88% against neat WPO, respectively. Brake thermal efficiency (BTE) was found to deteriorate with increasing n-hexanol fraction to the blend. D50-W20-H30 presented the lowest BTE among the blends, but it showed 7.6% increased BTE when compared to WPO and suffered 6% loss in performance against diesel. Reformulation of WPO with n-hexanol derived from lignocellulosic biomass feedstock presents an attractive opportunity to utilize both a recycled and a renewable fuel in diesel engines.