Utilization of metal nanoparticles has gained attention in the efficient combustion of biofuels. This approach is effective when nanomaterial, hereafter called as modified nanofluid fuel (“MNF” comprised of AC biodiesel 40 vol%, diesel 60 vol% and 150 mg/litter of TiO2 nanoparticles) injection temperatures and engine operational parameters are simultaneously optimized for best system performance. The present modeling/ optimization work (RSM/DFA) on 3.5 kW diesel engine, considering cumulative effect of MNF fuel preheating and engine operating parameters resulted in notable change in BTE, BSFC, CO and smoke emissions by 3.25%, 18.42%, 38% and 20% respectively. The developed model equations, results are (95.0% confidence interval) statistically fit with closeness in experimental responses and normal distribution of their residuals.