Computational fluid dynamics (CFD) simulation was applied to simulate the dilution of undiluted crude oil (UCO) in a dilution tank of a palm oil mill. Fluid flow and mixing characteristics were examined. Considering the mixing behavior, the mixing of dilution water and UCO occurred as soon as these fluids entered the dilution tank, and the oil mass fraction in the mixture decreased gradually towards the outlet of the tank. Meanwhile, the velocity of dilution water and UCO declined as the fluids moved from their respective inlets. The intensity of turbulence flow remained until near the tank outlet. For the parametric study, the oil mass fraction of diluted crude oil (DCO) increased with higher UCO flow rate and oil mass fraction in the UCO but declined with higher dilution water flow rate.