Abstract Oil provides energy for 95% of transportation and the demand of transport fuel continues to rise. According to the assessment of IPCC (International Panel on Climate Change) to climate change, global oil demand will rise by 60% from 75 Mb/d in 2000 to 120 Mb/d in 2030. Almost three quarter of the increase in demand will be form the transport sector. Oil will remain the fuel of choice in road, sea and air transportation. Our country being a developing country, the increase in demand in our country for oil for use in the transport sector will grow at a much higher rate. All countries including India are grappling with the problem of meeting the ever increasing demand of transport fuel with the constraints of international commitments, legal requirements, environmental concerns, and limited resources. In this context transport fuels of biological origin have drawn a great deal of attention during the last two decades. Biofuels are renewable liquid fuels coming from biological raw materials and have been proved to be good substitute for oil in the transportation sector. As such Biofuels ethanol and Biodiesel are gaining world wide acceptance as a solution for problems of environmental degradation, energy security, retracting imports, rural employment and agricultural economy. With a view to add Bio-Fish Oil to the list of biodiesel, experimental studies were made using this bio oil in a single cylinder diesel engine and generator set as substitute for diesel fuel and the results are discussed. It is also blended with oxygenate and EGR technique also used to improve the performance and reduce the emission of the engine. Encouraging results were obtained from this investigation. The percentage reduction is CO – 91%, CO2 – 62%, NOx – 92% and CxHy – 90% were attained when the engine was run at maximum load using BFO with 2% additive with EGR and there was reduction in all the percentages when the engine was run in other loads also. In the case of NOx, there was an increase of this emission by about 48% in the maximum load with BFO when compared with diesel, for obvious reasons and that was also reduced because of the addition of oxygenates and EGR technique. The optimum values were obtained with 2% of additive. When this percentage is increased or decreased the emission were increased.