For the past one hundred years, lots of easily accessible petroleum fuel has been burned out by humankind in inefficient engines. In this regard, present-day engine researchers face a formidable challenge to achieve the goal of significant improvements in both thermal efficiency and fuel economy. Although the direction to reach this target is critical, homogenous charge compression ignition (HCCI) is just another combustion concept to achieve this target. By the way, this work investigates the combustion phenomena of the HCCI engine by external mixture formation technique. In a nut-shell, an endeavor has been made in this work to prepare homogeneous mixture outside the combustion chamber using a fuel vaporizer system to form a uniform fuel–air mixture. The fundamental research experiments were carried out with vaporized diesel and vaporized e-diesel blends (10% and 20% ethanol substitution by volume), and the results were compared with conventional diesel engine operation. In HCCI mode, the maximum rate of pressure rises and the maximum rate of heat-release significantly reduced with increase of ethanol concentration in diesel. The experimental outcomes exposed that when HCCI engine is operated with e-diesel blend, smooth engine operation is apparent.