This article aims to assess the performance characteristics of lab-grown graphene nanoparticles via electrolytic exfoliation as nano additives in engine oil. Physical characterization confirmed the morphology and purity of the prepared graphene nanoparticles. Nanolubricants were prepared at 0.1%, 0.2%, and 0.3% volume fraction of the nanoparticles with the addition of oleic acid as surfactant. Measurements of density and viscosity for the nanolubricants were recorded at varying concentrations and temperatures. The performance parameters of a 4-stroke single-cylinder compression ignition (CI) engine were computed using the formulated nanolubricants. The emission of toxic gases into the environment post-engine performance evaluation was also analyzed for different formulations of nanolubricant samples. Results showed that the relative viscosity variation with concentration for the experimental data was in well agreement with other available predictive models. The nanolubricant with 0.1% concentration yielded a reduction of 13.96 ± 0.39% in total fuel consumption (TFC), a reduction of 5.55 ± 0.17% in brake-specific fuel consumption (BSFC) and an augmentation of 3.96 ± 0.13% in brake thermal efficiency (BTE) in comparison to plain engine oil and other prepared formulations. Also, a marginal reduction in emission of exhaust toxic gases i.e., (2.13 ± 0.1%) ppm in NOx and a significant maximum reduction of 7.46 ± 0.2% in smoke opacity has been obtained with 0.1% nanolubricant sample as compared to other test samples. The results from the present study may be useful for developing sustainable nanolubricants for environmental viability and energy savings.