Diesel fuel has a limited resource, and concerns over environmental pollution are leading to the use of ‘bio-origin fuels’ as they are renewable and environmentally benign. Palm oil methyl ester, an esterified biofuel, has an excellent cetane number and a reasonable calorific value. Besides, palm oil methyl ester (C18.07H34.93O2) has around 11.25% of oxygen bonded in its molecular structure which increases its burning intensely. Thus, it closely resembles the behavior of diesel. However, being a fuel of different origin, the standard design limits of a diesel engine is not suitable for palm oil methyl ester. Therefore, in this work, a set of design and operational parameters are studied to find out the optimum performance of a palm oil methyl ester run diesel engine. The parameters varied are the compression ratio (CR) and injection timing (IT) along with load in a variable compression ratio diesel engine. The palm oil methyl ester run engine is investigated for its performance, combustion and emission characteristics. The combination of CR = 18 and IT = 20°BTDC improves the efficiency by 8% and cuts the exhaust gas temperature by 5%. Moreover, the palm oil methyl ester run engine lowers the ignition delay which further gets reduced by 7% and 12% with CR augmentation and IT retardation, respectively. The increase in CR trims down carbon monoxide by 40%, nitrogen oxides by 46% and hydrocarbon by 40%; however, it increases carbon dioxide emission by 19%. The IT retardation reduces the carbon dioxide emission by 16%.