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The present experimental investigation is conducted to examine the working characteristics of compression ignition (CI) engine using oxygenated additives such as diethyl ether and ethanol to the blends of C alophyllum inophyllum biodiesel. Experiments are conducted on a water-cooled single-cylinder constant speed DI (direct injection) diesel engine under same operating circumstances. The results indicates that an enhancement of brake thermal efficiency is up to 3.7% and 6.2% with an addition of ethanol and DEE additive in biodiesel blended fuels respectively at maximum load condition. This is attributable to the existence of higher oxygen value and volatile nature of the additives. The combustion characteristics like in-cylinder pressure and net heat release rate of DEE blended fuels are 1.1–5.2% and 0.4–2.7% higher than other blends respectively. This is mainly due to higher cetane number and high volatile nature of DEE. This also results in higher NO X emissions. But 2–9% drop in nitrous oxide emission is noticed for biodiesel with ethanol blends compared to all other blends. This is as a result of superior latent heat of vaporization and lesser cetane number of ethanol which results in lower cylinder pressure about 0.4–2.6% and this end up with more unburned HC and CO emissions. Energy and exergy studies help to analyze the result of ethanol and DEE additive along with blends of biodiesel. The exergy efficiencies of DEE blended fuels enhance up to 2.3–6% compared to other blends at all load conditions. This is attributable to the superior combustion characteristics of DEE.