In this paper, biodiesel was used as an alternative fuel to investigate the combustion and emission characteristics of a four-stroke diesel engine, in terms of cylinder pressure, heat release rate, cylinder temperature, brake thermal efficiency, brake specific fuel consumption, nitrogen oxide, soot, carbon monoxide, and hydrocarbon. Firstly, a diesel engine cylinder model was developed by AVL-Fire software coupled with CHEMKIN code to simulate the injection and combustion of biodiesel with a kinetic mechanism with 106 species and 263 reactions. Then, the simulation model was validated by experimental results under 100% and 50% load conditions and used to simulate the combustion process of a diesel engine fueled with pure diesel, biodiesel, and biodiesel–diesel blends with 10%, 20%, 30% biodiesel by volume, respectively. The results showed that the brake specific fuel consumption increased with the increase of mixed biodiesel ratio. The brake specific fuel consumptions of B10, B20 and B30 increased by 1.1%, 2.3% and 3.3%, respectively, compared with that of D100. The combustion and emission characteristics of the diesel engine are improved. Therefore, biodiesel can be used as an alternative fuel for the diesel engine. The diesel–biodiesel fuel can improve the combustion and emission characteristics of the diesel engine.