Utilization of biodiesel which is of renewable in nature was enhanced in single cylinder, 4-S diesel engine based on combustion, performance and emission analysis. Esterified jatropha biodiesel (EJO) at 4%, 10% and 20% was added in normal diesel by v/v ratios to form B04, B10 and B20 blends. The crown surfaces of piston, cylinder head and valves were coated with 250 μm thick mullite material (Metco 6150) to form low heat rejection engine (LHRE). The optimum EJO blend for the conventional engine (CE) as well as LHRE was investigated by comparing their characteristics from all biodiesel blends with the normal diesel of CE operation. B10 was obtained as an optimum blend for both engines. For CE at B10 operation, the CO, HC emissions (except NOx) and brake thermal efficiency (BTE) were reduced as compared with CE at diesel fuel. For LHRE operation, the emissions were further reduced but BTE was slightly reduced. Finally to improve the usability of biodiesel, 5% anhydrous ethanol was added into optimum blend to form E05B10 mixture. Ethanol required higher latent heat for evaporation; this caused reduction of NOx and improved BTE. Emission load on environment (GWP, RIP and TAP) was reduced by optimum blend operation.