In the present energy scenario of increased energy demand, rapid depletion of petroleum resources and increased environmental problems, the search for new renewable and alternative fuels have gained momentum. This study represents an experimental investigation to examine the effect of nano additives on single cylinder DI diesel engine performance at variable operating conditions. In this work alumina nanoparticles having average size of ~10 nm were dispersed in a mixture of jatropha methyl ester and conventional diesel fuel (20% jatropha biodiesel and 80% diesel fuel) at proportion of 20, 30 and 40 parts per million. The obtained results were compared with neat diesel and B20 as base fuels. It is found that, the appropriate nanoadditives dose corresponding to optimal engine performance is about 40 ppm of alumina nanoparticle. At this dose, the overall BSFC is reduced by about 12.5%, engine thermal efficiency is increased up to 12%, and exhaust gas temperature is reduced by 13%. Along with percentage reduction of smoke opacity by 20 %, unburned hydrocarbon by 10 %, carbon monoxide by 29 % and nitrogen oxides by 13% compared with the corresponding values obtained when only a blended fuel of 20% biodiesel is used. Such type of biofuel based Nano fluids having improved performance characteristics can be utilized directly as an alternate fuel for diesel engines.