Many investigators have examined the effluent of different types of nanoparticles on emission characteristics and performance of diesel engine but most of the present studies have been concentrated only diesel or biodiesel that contain dispersed nanoparticle. In the present work, water in diesel Nano-emulsified fuel was prepared by high speed rotor-stator homogenizer, and then addition of (50ppm, 100ppm, 150ppm) Zirconium oxide ZrO2nanoparticle blended water-diesel nanoemulsion (WiDNE). The objective of this project is to evaluate the effect of ZrO2 nanoparticles on combustion characteristics and engine performance. Direct injection (DI), water cooled four cylinders, in-line, natural aspirated Fiat diesel engine was used and run at a constant speed (1500 rpm) and constant fuel injection pressure (400 bars) with varying the operation load. The concentration of the emission gases such as NOx, unburned total hydrocarbon HC, CO and CO2 was measured by Multigas analyzer model 4880. The engine exhaust smoke emissions were measured using the AVL-415 smoke meter. The experimental results notified that WiDNE+ZrO2 fuel imposes the capability to enhance fuel properties, improve the engine efficiency as well as reduction in the emissions concentrations of exhaust gas..