The energy import is considered as one of the major threats to economic as well as social developments in developing countries like India. India is a major importer of crude oil as the availability of this oil in India is much lesser than its demand. As per the statistical report from the Ministry of Petroleum & Natural Gas, Govt. of India (Economic Division), the increment in crude oil consumption in India is 35.36% compared to production (only 3.7% increased). The wide range of research work was reported using diesel-biodiesel and diesel-ethanol as alternative fuels in diesel engines. These fuels have some merits and demerits when they are used in diesel engines. Some researchers were trying to combine these two biofuels with diesel hoping to add the benefits of these two and overcome the drawbacks of each other. This books deal with investigation of experiments conducted in a multicylinder direct injected diesel engine with diesel, ethanol derivative and biodiesel blends as fuel. Initially Rectified Spirit (93% ethanol and 7 % water) was blended with diesel-biodiesel blend to improve the performance and emission level.  Based on the experimental results, it was found that the addition of 10% rectified spirit gives more thermal efficiency.  Water content in the rectified spirit and its lower cetane number affects the engine performance. To remove the water content in the rectified spirit and increase the cetane number, diesel-biodiesel-ethanol derivatives were used. These derivatives such as ethanol (E) and diethyl ether (DEE) were blended with diesel-biodiesel blend separately. The performance, emission and combustion characteristics of the multi cylinder diesel engine fueled with diesel and diesel-biodiesel-RS/E/DEE blends were investigated and discussed.The European stationary cycle was followed in the testing of the engine with each fuel. The performance and emission characteristics of diesel-biodiesel-DEE blends were superior to rectified spirit and ethanol based hybrid fuel blends. Also the performance, emission and combustion characteristics of the diesel and hybrid fuel blends were compared at normal and advanced injection timings (2º and 4º advance). Based on experimental data, multiple linear regression model was developed to predict the performance, emission and combustion characteristic of the multi cylinder diesel engine using simulation program. To validate this model a hybrid fuel comprising diesel-palm methyl ester (PAME)-ethanol was used in the same engine and same operating conditions. The regression model can be able to predict the performance, emission and combustion characteristics of the engine with any combination of bio fuels.  The present investigation indicates that the utilization of bio fuels instead of fossil fuels should provide reliable income for rural communities of developing countries.