This work aims on the efficient use of ethanol-biodiesel-water micro-emulsions in a diesel engine. A single cylinder direct injection diesel engine is tested using neat biodiesel and the micro-emulsions as fuels under variable operating conditions. The results indicate that, compared with biodiesel, the peak cylinder pressure of the micro-emulsions is almost identical, and the peak pressure rise rate and peak heat release rate are higher at medium and high engine loads. At low engine loads, those of the micro-emulsions are lower. The start of combustion is later for the micro-emulsions than for biodiesel. For the micro-emulsions, there is slightly higher brake specific fuel consumption (BSFC), while lower brake specific energy consumption (BSEC). Drastic reduction in smoke is observed with the micro-emulsions at high engine loads. Nitrogen oxide (NOx) emissions are found slightly lower under all rang of engine load for the micro-emulsions. But carbon monoxide (CO) and hydrocarbon (HC) emissions are slightly higher for the micro-emulsions than that for biodiesel at low and medium engine loads. (C) 2009 Elsevier Ltd. All rights reserved.