Diesel fuel is widely used in almost all scopes of life, especially in the transportation sector which accounts for 36% of total energy consumed in 2008 in Malaysia. The transportation sector represents the higher energy consuming sector after industrial sector. As the main fuel used in diesel engine now is the fossil fuels which depleting continually accompanied by increasing consumption and prices day by day. Blended biodiesel fuel is considered as alternatives to current fossilized fuels at a low blending level less than 30% biodiesel. The fuel physical characteristics are among the most important parameter to determine the quality of each fuel. Though biodiesel can replace diesel satisfactorily, problems related to fuel properties persist at high blending ratio. In this study an oxygenated additive diethyl ether (DEE) was added to palm oil biodiesel (POME)-diesel blend B40 (40% vol. POME + 60% vol. diesel) in the ratios of 2%, 4%, 6% and 8% and tested for their properties improvement. These blends were tested for energy content and various fuel properties according to ASTM standards. Qualifying of the effect of additive on palm biodiesel-diesel blended fuel properties can serve the researchers who work on biodiesel fuels to indicate the fuel suitability for diesel engines according to fuel standards. The results showed an improvement in acid value, viscosity and density. The minimum pour point for the blended fuel was-2 °C for B40DE6 compare to 1°C for blended fuel B40, while maximum decrease in energy content for B40DE8 was about 7.36% compare to blended fuel B40.