Biodiesel has emerged as a promising renewable fuel, which can help reduce dependency on fossil fuel and has potentiality to replace petrodiesel partially. Usage of biodiesel results in decreased carbon monoxide, hydrocarbon, and particulate matter emission. However, it has some drawbacks such as increased nitrogen oxides (NOx) emission, lower calorific value, and poor engine performance, which restrict wide usage of biodiesel as a potential substitute in compression ignition engine. There is a scope to overcome these problems by applying metal based nanoparticles (NPs) as fuel additive. This article reviews the preparation and stability of nanofluid and the effect of metal based NPs on fuel properties, combustion, performance, and emission characteristics. It has been concluded that inclusion of nanoadditives increases cetane number and calorific value of blended fuel. According to the most authors, metal based NP doped biodiesel blend enhances ignition characteristics, improves engine performance, and reduces emissions including NOx compared to biodiesel blend without additive. However, some concerns and challenges identified in this article need to be addressed to make this technology feasible for commercial application in near future.