This study investigated diesel engine combustion and emissions characteristics using blends of biodiesel and polystyrene. As polystyrene accounts for approximately 22% by weight of all high volume plastics, it is attractive to develop methods to convert these waste plastics into energy. Biodiesel is a biorenewable fuel and a good solvent for certain materials. In this study, biodiesel was used as a recycling agent and polystyrene packing peanuts were dissolved in biodiesel in different concentrations as a means to recover energy from waste plastics. Test results showed that engine power increased initially with the polystyrene concentration and then decreased for concentrations higher than 5%. The initial increase in engine power was mainly due to the injection timing advancement caused by the increased bulk modulus and viscosity of fuel blends. The decline in engine power at high polystyrene concentrations could be caused by the poor spray atomization and deteriorated combustion efficiency due to the high viscosity of polystyrene mixtures. Emissions of NOx soot, CO, and HC were found to increase with the polystyrene concentration if the injection timing was free to advance due to the increased bulk modulus and fuel viscosity. Parametric study was performed by varying engine operating parameters including the fuel injection timing and exhaust gas recirculation. For the same injection timing, higher polystyrene concentrations still resulted in higher soot, CO, and HC emissions but lower NOx emissions. This study demonstrated that polystyrene-biodiesel blends could be successfully used in diesel engines with minor modifications to the fuel system and appropriate adjustments to engine operating conditions.