This work reports the engine performance, emission parameters, and energy‐exergy characteristics of a twin cylinder four‐stroke CI engine fueled with Diesel blended Kaner seed pyrolysis oil (KSPO). KSPO is obtained by the thermal pyrolysis of Kaner (Thevetia peruviana) seed at 600°C in a batch reactor and mixed with diesel in the ratio of 5, 10, 15, and 20%, to use in the engine. Brake thermal efficiency is marginally higher and brake specific fuel consumption is comparatively lower for KSPO‐diesel blend as compared to pure diesel fuel operation. Low carbon monoxide emission and high hydrocarbon, oxides of nitrogen and smoke emission is observed with KSPO—diesel blend. In addition, energy and exergy values of KSPO‐diesel with different blends at different loads are evaluated. Fuel exergy rate of the blended fuel is higher than pure diesel fuel where as exergetic efficiency of the blended fuel found is lower than pure diesel fuel. Moreover, the exergetic efficiency is increased with increasing engine load.