The growing price of fossil oils, the gradual decline of petroleum supplies and the unsustainable emissions of motor vehicles led researchers to look for substitute fuel, such as waste lubricant oil and waste transformation oil (WTO). In power transformers, welding transformers, and electromotive systems, a significant volume of transformer oil is used as a coolant. The electrical transformer is an integral part of electrical power transmission and distribution equipment used in smaller, intermediate and larger electrical distribution stations. The efficiency and lifespan of an electrical transformer depend upon the transformer’s efficient cooling and insulation. During the working of a transformer, transformer oil is exposed to electrical and thermal stress due to which it started to degrade after some time. Thus a huge amount of degraded transformer oil is rejected as waste. The paper details the utility of waste transformer oil by using simple batch distillation operation at atmospheric pressure by analyzing the physiochemical properties of the product. The treated transformer oil is further tested in the diesel engine to examine fuel efficiency. Diesel engine runs were performed with various combinations of blends consists of diesel fuel and treated transformer oil. Results reveal that brake thermal efficiency of the blends found at 10%, 20%, 30% and 40% is 28.19%, 27.52% 26.21% and 25.98% respectively. The brake specific fuel consumption of blends at 10%, 20%, 30% and 40% is 0.29 KJ/Kwhr, 0.30 KJ/Kwhr 0.31 KJ/Kwhr and 0.315 KJ/Kwhr respectively.