Energy is indispensable for modern civilization. Fossil fuel is still the main source of energy. But the huge consumption of fossil fuel has brought its reserve about to an end. As a result, fuel prices are gouging as a consequence of spiraling demand and diminishing supply. So, it’s an important challenge to search alternative and cost effective fuels, to meet the demand. Diesel engines are more efficient and cost-effective than other engines. This paper estimates the feasibility of mustard oil as an alternative fuel for diesel engine in two state i.e. pure form and esterified form. In this study, mustard oil is converted to bio-diesel by well known trans-esterification reaction and makes blend with diesel in different proportion named as B20, B30, B50 and B100. Bio-diesel has different fuel properties than diesel fuel. So other than modification of the engine or the fuel supply system blends of bio-diesel has been used. On other hand, pure mustard oil (without trans-esterification) is blended with diesel named as M20, M30, M40 and M50. These blends are tested in a 4 stroke single cylinder diesel engine to determine performance. B20 as esterified and M30 as non esterified blend show the best engine performance among the blends. Finally, a comparison of engine performance for different blends of mustard oil has been carried out to choose the correct blend for different operating conditions.