This study investigated the use of nano-blended biodiesel, made by mixing waste transformer biodiesel with nanoscale aluminum oxide particles. A fuel blend ratio containing both diesel and biodiesel components was created with 100 parts per million of alumina nanoparticles. All tests were conducted at various loads in an engine, using diesel, biodiesel, and nano-blended biodiesel fuel. The outcomes demonstrated that adding nanoparticles improved engine thermal efficiency and reduced emissions, especially at higher fuel injection timings. The greatest increase in brake thermal efficiency, 6% higher than diesel mode, was achieved with a nano-blended biodiesel formulation containing 100 ppm of aluminum oxide, at a fuel injection timing of 27 before top dead center under full load conditions. With a constant nanoparticle-blended biodiesel content and fuel injection timing of 27 before top dead center, reductions of 1.5% in smoke, 33% in hydrocarbon, and 8% in carbon monoxide emissions were observed, with a 9.7% increase in NO emissions.