Abstract The present study focuses on the synthesis of novel catalytic nanoparticles and their effect on combustion, performance, and emission characteristics of a diesel engine. For this purpose, Mg cations were doped into a Fe3O4 lattice to form MgxFe(3-x)O4 (x = 0.25, 0.5, 0.75, and 1) using a solution combustion method. Comprehensive characterization studies were carried out to assess the oxygen storage capacity (OSC) and the properties of final powders. These synthesized samples were dispersed in a diesel-biodiesel blend fuel with a concentration of 90 ppm. Assessment of the structure of the samples proved the formation of MgFe2O4 structures, suggesting that Mg cations were embedded into the Fe3O4 and formed appropriate structures. The OSC was reduced from 8661 μmol/g (Mg0·25Fe2·75O4) to 7069 μmol/g (MgFe2O4) by introducing additional Mg cations. When run on a six-cylinder diesel engine, the fuel mixed from the synthesized samples did not significantly influence the indicated power (IP), brake specific fuel consumption (BSFC) or the brake thermal efficiency (BTE). In addition to the obtained result for the OSC of the sample, which declined by increasing the Mg concentration in the Fe3O4 lattice, using the sample with the highest concentration of Mg cations, a considerable reduction was detected in the major exhaust emissions such as HC (56.5%), PM1 (35%), and PN (37%) and a slight decrease occurred in CO (7%) compared to the engine fueled by pure fuel. Based on the experimental engine results, the MgFe2O4 sample can be considered as a useful nanocatalyst for mixing in the fuels for emissions reduction.