Bioethanol (15 wt%) derived from waste rice straw blended with diesel [e-diesel (B15)] and tested in a variable compression ratio (VCR) compression ignition (CI) engine with compression ratios of 14 and 18 under 0% and 100% load conditions. The engine performances of diesel fuel with 25, 50, 75 ppm of Al2O3 nanoparticles [nanofuel (N25, N50, N75)] and B15 with 25, 50, 75 ppm of Al2O3 nanoparticles [nanofuel (NB25, NB50, NB75)] are next investigated similarly. The performance measures investigated are energy efficiency, exergy efficiency, brake specific fuel consumption (BSFC), heat release rate (HRR), peak cylinder pressure, and CO, HC, and NOx emissions. The cost of e-diesel and nanofuels are predicted using economic analysis and compared to regular diesel (D) fuel. Other parameters, with BSFC exception, are observed to increase as load changes from 0 to 100%. From different fuel types, N75 exhibits maximum energy efficiency of 34.3%, exergy efficiency of 65.27%, heat release rate of 68 J/crank angles, peak cylinder pressure of 84.1 bar, the relative cost of −14.63%, minimum BSFC of 0.449 kg/kW-hr, CO emission of 0.2%, and HC emission of 32 ppm for maximum load and compression ratio conditions, whereas the N50 exhibit minimum NOx emission of 398 ppm.