The effect of biodiesel fuel on direct injection diesel engine performance was investigated. Biodiesel fuel used in this study was made by an esterification of palm oil. It was blended with diesel fuel, and the blend ratio was changed from 0 to 20 wt %. The direct injection diesel engine used here was a single-cylinder general-purpose engine. The excess air ratio was changed from 1.85 to 3.0. CO, CO 2 , NO, NO 2 , and N 2 O concentrations in the exhaust gas were measured. Exhausted particulate matter was collected by a quartz glass filter and its components, such as soluble organic fraction, dry soot, and sulfate, were analyzed. Moreover, the size distribution of the particulate matter was analyzed using a scanning mobility particle sizer. The heat release rate and fuel injection rate in each condition were also measured to examine the relation between emission characteristics and combustion conditions. There was no apparent dependence of the biodiesel fuel blend ratio on the heat release rate and exhaust gas composition. This result shows that the combustion characteristics, such as ignition delay, did not change with the blended ratio, because the cetane index of the biodiesel fuel was equivalent to that of the diesel fuel. On the other hand, the particulate matter had a clear dependence on the biodiesel fuel blend ratio. When the blend ratio was 20 wt%, the amount of particulate matter was more than that in the 5 wt% and 10 wt% blended fuels. It was shown that, moreover, the amount of soluble organic fraction increased with an increase of the blend ratio. In the measured results of particulate matter size distributions, it was noteworthy that nanosize particulates (ranging from 10-20 nm) increased when 20 wt% biodiesel fuel blended fuel was used. From these results, it was inferred that the nanoparticles in the range of 10-20 nm were soluble organic fraction related particles. From the viewpoint of the reduction of particulate matter emission, we concluded that the optimum biodiesel fuel blend ratio was 5-10 wt%.