In the current study, computational fluid dynamics code was used to perform 3D simulation of mixture formation and combustion of biodiesel fuel spray in a direct injection diesel engine. Thus, the spray atomization and combustion processes were simulated by applying the improved version of KH–RT spray breakup model coupled with advanced ECFM-3Z model for combustion. To this aim, experimental results were used first to validate the calculated values of NOx, soot, heat release rate, and in-cylinder pressure and good agreement was obtained. To develop the engine performance and reduce the emission, various models of spray breakup of biodiesel fuel were simulated, and the optimum spray breakup model was specified. Also, the accuracy of each model was determined in comparison with the experimental results. The results show that the TAB breakup model has not provided acceptable results for spray characteristics compared to the other models. Since the simulation results of in-cylinder pressure and emissions were consistent with the experimental results by the KHRT model, it could be concluded that this model has correctly predicted the size of droplets produced by spray fragmentation and penetration, and it could be used to simulate the atomization of biodiesel fuel spray under different engine conditions by adjusting the model constants.