Second-generation biodiesels derived from non-edible feedstocks are a viable alternative to diesel, and the transformation of Asteraceae seeds into biodiesel is the topic of some fascinating research. In the earlier experiments, no attempt was made to optimize Carthamus lanatus (L.) biodiesel (CLB) for a higher yield rate and to discover whether it was suitable for use with a pre-heated water emulsion. The current study aims to extract biodiesel from Carthamus lanatus (L.) Boiss. seeds under optimal conditions, evaluate the effect of reaction parameters on yield rate and determine the appropriateness of pre-heated water-CLB emulsion for fuel applications. The reaction parameters such as catalyst concentration (CC), methanol ratio (MR), impregnation time (ITE) and impregnation temperature (ITP) were optimized using response surface methodology. The function group and chemical constituents of CLB were assessed by Fourier-transform infrared (FTIR) spectroscopy, and Gas chromatography–mass spectrometry (GC-MS). The CLB was blended with various volume concentrations of pre-heated water and their physicochemical properties were assessed. With CC of 2.51737%, MR of 11.0135:1, ITP of 115.625 °C, and ITE of 140.292 min, the CLB yield rate is intensified to 94.51%, and the ITE has a major influence (52%) on yield rate. The FTIR report indicates that the carbon-based components are significantly contributed, and the GC-MS report states that linoleic acid has a maximum contribution. Physicochemical properties reveal that CLB is a suitable alternative to diesel and that up to 15% of the pre-heated water contained in CLB can be used as a direct fuel.