Improving oxygen storage capacity (OSC) of metal oxides by doping with metal cations can produce a catalyst with superior properties to improve engine performance and reduce emissions. In this study, Mg cations were incorporated into a ferric oxide lattice to form Mg0.25Fe2.75O4 via the solution combustion method. The structure, texture, morphology, and oxygen storage capacity of the samples were deeply investigated. The catalytic activity of Mg0.25Fe2.75O4 was finally compared with Fe3O4 as a reference nanocatalyst in terms of its combustion emissions using a six-cylinder Cummins diesel engine. It was found that the doped catalyst presented high crystallinity containing a mixture of the spinel-type crystal lattice and α-Fe2O3 structure, which confirms the ability of the solution combustion method for the fabrication of well-crystalline catalysts. The crystalline structure, surface area, and porosities and vacancy of spinel structure of Mg doped catalyst compared to the inverse spinel structure of Fe3O4 affect OSC of the samples, such that a significant increase in OSC of Fe3O4 (7941 µmol/g) occurred by loading of Mg cations (8661 µmol/g). Based on the engine emissions results, synthesized nanocatalysts are beneficial for decreasing the hydrocarbon (HC), carbon monoxide (CO), and particle mass (PM1.0) emissions. More specifically, the effect of nanocatalysts OSC would be dominated by the impact of increased soot oxidation, leading to PM1.0 reduction.