Biodiesel is a fatty acid alkyl ester, which is renewable, biodegradable and non-toxic fuel which can be derived from any vegetable oil by transesterification. One of the popularly used biodiesel in India is Mahua oil (Madhuca Indica). In the present investigation Mahua oil was transesterified using methanol in the presence of alkali catalyst and was used to study the performance and emission characteristics. The biodiesel was tested on a single cylinder, four stroke compression ignition engine. Engine performance tests showed that power loss was around 13% combined with 20% increase in fuel consumption with Mahua oil methyl ester at full load. Emissions such as carbon monoxide, hydrocarbon were lesser for Mahua ester compared to diesel by 26% and 20% respectively. Oxides of nitrogen were lesser by 4% for the ester compared to diesel. (C) 2010 Elsevier Ltd. All rights reserved.