The study explores the impact of a zinc oxide (ZnO) induced carbon nanotube (CNT) nanocomposite on ammonia decomposition in aqueous ammonia (AA) emulsified diesel fuel, while evaluating performance and emissions. Functionalized CNTs induced with ZnO underwent structural and surface morphology analysis. Different concentrations of ammonium hydroxide (5 % and 10 %) were mixed with plain diesel fuel (PDF), and 100 ppm of ZnO/CNT was blended with 10 % AA emulsified fuel. Fuel performance was assessed under various brake power conditions compared to PDF. The results demonstrate that the absorption of latent heat by ammonia and its higher decomposition energy result in a longer ignition delay, thereby increasing peak in-cylinder pressure and net heat release rate. The post-combustion reaction of AA emulsified fuels contributes to increased brake specific fuel consumption (BSFC), brake specific energy consumption (BSEC), hydrocarbon (HC), carbon monoxide (CO), and smoke opacity. However, the dispersion of nanocomposite in AA emulsion enhances the catalytic effect and promotes ammonia decomposition, resulting in combustion characteristics similar to PDF. Notably, there is an observed improvement in BSFC by 8.1 % and BSEC by 10.9 %, respectively. Furthermore, emission metrics such as oxides of nitrogen, HC, CO, and smoke opacity decrease by 4.5 %, 18.8 %, 11.4 %, and 5 %, respectively.