The present study tested newly formulated hydrous ethanol–diesel‐emulsified fuel infused with nano‐sized γ‐Al2O3 particles on a turbocharged CRDI 4‐cylinder stationary diesel engine. W5H5, W5H10, and W10H5 test fuels were inducted into engine cylinders at a fixed engine speed of 2000 rpm. These test fuels significantly improved their physicochemical properties, with an 8.80% increase in gross calorific value and a 6.52% growth in cetane index. W5H10 exhibited a 16.01% increment in brake thermal efficiency and a 22.22% decrement in brake‐specific fuel consumption. Also, this fuel reported an 8.64% higher in‐cylinder pressure and a 40.71% higher heat release rate. W5H10 test fuel noted a 50% dip in carbon monoxide emissions and an 84.56% lower smoke opacity than diesel. W5H5 fuel reported 33.33% lower unburnt hydrocarbons than diesel at full load. W10H5 fuel observed an 88.46% drop in nitrogen oxide emissions compared with diesel at 10% engine load. The author found W5H10 the most suitable fuel for diesel engines with no modification costs.