In this contribution the two alternative fuels, firstly blended fuel of ethanol and gasoline (i.e. E15%+Gasoline 85%), and secondly, micro-emulsion (i.e. Gasoline 90%, E8% and H2O 2%) were compared with conventional 100% Gasoline fuel for checking the performance, combustion, and emission characteristics of 3-Cylinder SI engine experimentally. The blended fuel containing 15% ethanol with 85% gasoline and the micro-emulsion based fuel which contains H2O molecule in addition to simple blending were prepared in the lab, and both the fuels were tested experimentally on a 3-cylinder SI engine based test rig in order to find out which alternative fuel is more efficient in terms of performance and emission characteristics. The results depicted that although both the micro-emulsion based fuel and the blended fuel showed reduction in power as compared to conventional 100% Gasoline fuel, but the emissions were least for the micro-emulsion based fuel followed by the blended fuel. The CO, HC, and NOx emission decreased for both ethanol blended gasoline fuel and the micro-emulsion based fuel as compared to the 100% Gasoline. The injected water in the micro-emulsion fuel reduces the temperature inside the combustion chamber which is responsible for this decrease in NOx emission. For combustion analysis, pressure v/s the crank-angle showed slight decrease for the blended fuel (i.e. 15% ethanol with 85% Gasoline) and the micro-emulsion based fuel (i.e. Gasoline 90%, E8% and H2O 2%) as compared to the conventional 100% gasoline fuel. This can again be attributed to the fact that the micro-emulsion based fuel has a lower combustion chamber temperature compared to the conventional 100% Gasoline.