Flowers of madhuca indica tree are found to be a potential source for bioethanol production. The present work is aimed to study the effect of diethyl ether (DEE) as a cetane improver on engine behaviour when the DEE is added to bioethanol diesel emulsion in little quantities and used as fuels. 1% and 2% of DEE were added on a volume basis to BDE15 (bioethanol-diesel emulsion up to 15%) and named as BDED1% and BDED2% respectively. The combustion, performance and emission results were compared with those of diesel operation. The results showed that the bioethanol diesel emulsion operation, with and without the cetane improver, showed a higher brake specific energy consumption and exhaust gas temperature than that of diesel operation at maximum brake power. There was a simultaneous reduction of brake specific nitric oxide (BSNO) and smoke emission with the addition of cetane improver in bioethanol diesel emulsion.