In this study, the effects of tert-butanol on the engine performance of Karanja biodiesel/tert-butanol blends were examined. Experiments were conducted on a single-cylinder, four-stroke, water-cooled, diesel engine using various blends of Karanja biodiesel and tert-butanol (TB10KBD90, and TB20KBD80) and Biodiesel (KBD). Experimental results show that the tert-butanol and biodiesel blends (TB10KBD90 and TB20KBD80) have slightly and lesser Brake specific fuel consumption (0.3–0.5%) and elevated Brake thermal efficiency (0.7–0.9%) when compared to neat Karanja biodiesel (KBD) at all testing conditions. Further, the Exhaust gas temperature lowered significantly (0.6–0.8%) by adding tert-butanol to base fuel (BD100).