This work aims to investigate biofuels for diesel engines produced on a lab-scale from the fresh water microalgae Chlorella vulgaris (FWM-CV). The impact of growing conditions on the properties of biodiesel produced from FWM-CV was evaluated. The properties of FWM-CV biodiesel were found to be within the ASTM standards for biodiesel. Due to the limited amount of biodiesel produced on the lab-scale, the biomass of dry cells of FWM-CV was used to yield emulsified water fuel. The preparation of emulsion fuel with and without FWM-CV cells was conducted using ultrasound to overcome the problems of large size microalgae colonies and to form homogenized emulsions. The emulsified water fuels, prepared using ultrasound, were found to be stable and the size of FWM-CV colonies were effectively reduced to pass through the engine nozzle safely. Engine tests at 3670 rpm were conducted using three fuels: cottonseed biodiesel CS-B100, emulsified cottonseed biodiesel water fuel, water and emulsifier (CS-E20) and emulsified water containing FWM-CV cells CS-ME20. The results showed that the brake specific fuel consumption (BSFC) was increased by about 41% when the engine was fueled with emulsified water fuels compared to CS-B100. The engine power, exhaust gas temperature, NOx and CO2 were significantly lower than that produced by CS-B100. The CS-ME20 produced higher power than CS-E20 due to the heating value improvement as a result of adding FWM-CV cells to the fuel.