Preparation of emulsions from aqueous fractions of biomass pyrolysis liquid (bio-oil) and 0# diesel was studied under ultrasonic power. The thermogravimetric analysis and combustion characteristics of the optimized emulsions in a particular diesel generator were also investigated. The results show that the mass ratio of aqueous bio-oil fraction to 0# diesel affected the emulsion stability greatly, by factor analysis method, and the optimized emulsion was not stratified for 30 days when the ratio was 1:9 under the following conditions: water:bio-oil mass ratio, 2:1; ultrasonic time, 120 min; formula emulsifier addition (Span-80:Tween-80:Tween-20:n-octanol ratio = 72:9:9:10, wt %), 3 wt % (which was longer than that prepared by mechanical agitation). The density and heat value of the nonstratified emulsions (after 30 days) were similar with those of 0# diesel, because of the low aqueous bio-oil fraction content and 0# diesel dilution; however, an increase of more than 38.4% in the dynamic viscosity and a decrease in pH from 5.26 to <3 may result from the concentrated polar oxygenates and carbohydrates in aqueous bio-oil fraction, which were further solubilized in water-in-oil (W/O) emulsion droplets. In addition, ultrasonic emulsification resulted in entropy augmentation and equilibrium tendencies (by thermodynamic analysis). Thermogravimetric analysis of the emulsion shows that there is a weight loss peak that is attributed to residual carbon combustion above 400°C, in addition to a similar hydrocarbon vaporization peak at 180°C with diesel. The existence of residual carbon and the high viscosity of the emulsion might have caused inefficient combustion when the output power of diesel generator was above 1400 W with high feeding amount, which also resulted in higher exhaust gas temperature than diesel feedstock, although microexplosion may have occurred. Moreover, when the output power increased to 1600 W with the emulsion used, the O 2 and NO X emissions decreased 21% and 87.2%, respectively, the CO 2 emission increased 13.3%, and the CO and SO 2 emissions increased quickly to 5124 ppm and 59 ppm, respectively, compared with pure diesel. The corrosion and blockage caused by coking of the injector were obvious.