The present study investigated the effect of adding functional multi-walled carbon nanotubes (MWCNTs-COOH) to diesel-biodiesel fuel on the engine performance and emission characteristics of a diesel engine. The MWCNTs-COOH nanoparticles were mixed with B5 biodiesel blend. The MWCNTs-COOH nanoparticles, at concentrations of 30, 60, and 90 ppm, were dispersed into B5 by ultra-sonication. Engine testing was performed at various speeds of 1800, 2100 and 2400 rpm and full load. Performance and emission characteristics, including power, torque, specific fuel consumption (SFC), CO, CO2, unburned-hydrocarbon (UHC), and NOx emissions, were investigated. The results showed that adding MWCNTs-COOH to B5 increased power by 13.01% and 16.57% compared to D100 and B5. The average torque also increased by 17.61% and 18.03% compared to the D100 and B5, respectively. SFC decreased by 9.48% and 10.21%, respectively, compared to D100 and B5 fuels. Despite MWCNTs-COOH in the fuel, CO emissions decreased by an average of 10.26% and 7.26% compared to the D100 and B5, respectively. Also, UHC emissions decreased by 16.33% and 10.64% compared to the D100 and B5 fuels, respectively.