This article describes the possible utilization of three emulsions obtained from karanja methyl ester (KME) and wood pyrolysis oil (WPO) as fuels in a direct injection diesel engine. For this study, the three emulsions, namely, WPO5, WPO10, and WPO15 were prepared by taking WPO at 5%, 10%, and 15% with KME at 95%, 90%, and 85%, respectively, using a suitable surfactant for preparing water-in-oil emulsion. Experiments were conducted to evaluate the combustion, performance, and emission parameters of a single cylinder, fourstroke, air-cooled, direct injection, diesel engine running with the three emulsions. The results of the experiments were compared with diesel operation. The test results indicate that lower ignition delay and high peak cylinder pressures are observed with KME-WPO emulsions. The KME and KME-WPO emulsions exhibit lower specific energy consumption and higher exhaust gas temperatures. Results also indicate that nitric oxide emissions for KME and WPO5, WPO10, and WPO15 emulsions are higher by about 16%, 10.8%, 2.2%, and 0.5% compared with that of diesel fuel at full load. The hydrocarbon emissions for KME, WPO5, WPO10, and WPO15 are found to be lower by about 7.1%, 50%, 42.8%, and 28.5%, respectively, compared with that of diesel at full load. The percentage reduction in the smoke density by 25%, 21.4%, 16%, and 10% is achieved with KME, WPO5, WPO10, and WPO15, respectively, at full load when compared with diesel fuel.