The present study aims to evaluate the combustion, performance and emission characteristics of a diesel engine fueled with SB and its water blends (10% and 20%), and the results compared with BD. Emulsion fuels were prepared using Sorbitan monolaurate surfactant and high-speed of mechanical agitation, and the properties were measured. Experiments were conducted in a single-cylinder, 4-stroke and naturally aspirated diesel engine with an eddy current dynamometer under different BMEP conditions. The measured physicochemical properties of test fuels are at par with standard limits except for SB20W emulsion fuel’s viscosity. The peak ICP, NHR, RPR and IDP are reduced for SB compared to BD, whereas significant increases are recorded with water emulsified SBs. The BSFC of SB is higher than BD due to its lower calorific value. However, the BSEC of SB and SB10W emulsion fuel is lower than BD due to an enhanced combustion reaction. The pure SB exhibits a higher magnitude of NOx emission and lower magnitude of smoke, CO and HC emissions compared to BD. An increase in water concentration reduces the NOx emission, and SB10W emulsion fuel exhibits better smoke, HC and CO emissions under partial and peak BMEP conditions compared to other test fuels.