Ethanol is a promising renewable oxygenated fuel for engines, and many experimental studies on the using of ethanol-diesel fuel blends in diesel engines have been done. But modeling studies on ethanol blends are very scarce. For this reason; the present study intends to investigate numerically the effects of the use of ethanol-diesel fuel blends on the engine performance characteristics such as brake specific fuel consumption (BSFC), brake effective power, brake effective efficiency, exhaust emissions, and cost by using two different turbocharged direct-injection (DI) diesel engines. A computer program has been used for prediction of diesel engine cycles and engine characteristics for the case of neat diesel fuel (NDF) and this program was modified for ethanol-diesel fuel blends. In the diesel engine cycle modeling, a quasi-dimensional phenomenological combustion model previously developed by authors has been used. This model is based on the model originally developed by Shahed and then improved by Ottikkutti, and it has been modified by the authors with new assumptions. By doing some modifications and adaptations in this model it has been converted to the ethanol-diesel fuel blends version. After the engine cycle model for NDF and ethanol-diesel fuel blends was proven to give correct results by comparing with relevant experimental and numerical results, (2-10) % ethanol-diesel fuel blends have been investigated numerically. The results indicate that as ethanol percentage in the mixture increases, BSFC reduces and brake effective efficiency improves significantly and brake effective power increases slightly. On the other hand, equivalence ratio decreases and ignition delay increases for ethanol blends, and combustion duration exhibits generally a decreasing tendency. The concentrations of nitric oxide (NO), the mole fractions of carbon monoxide (CO), and hydrogen (H-2) increase at low ethanol ratios because of increase of the temperatures of the cylinder contents. But at high ethanol ratios they decrease because of decreasing temperatures. In the present study, cost analysis has also been performed by using a semi empirical relation given by Durgun. It was determined that ethanol blends are not economical for these engines because the cost of ethanol is higher than that of diesel fuel in Turkey, as well as in many of the other countries, and the decrease in the BSFC is low. In the present study, the effects of the using of ethanol blends at constant equivalence ratios (CER) have also been investigated. In this application, BSFC enhances with increasing ethanol ratios. Also, brake effective power, brake effective efficiency, and combustion duration increase until (4-6) % ethanol ratios at CER and after these ratios they start to decrease. NO concentration and the mole fractions of CO and H-2 show generally a decreasing tendency.