The effect of iron (Fe) nanoparticles additive to biodiesel blend and diesel fuels in terms of engine performance and emission characteristics is experimentally investigated in a stationary diesel engine. A fuel additive INP is suspended in the neat diesel (D) and 20% palm biodiesel (PB) blend with diesel (PB20) using ultra-sonication process and these modified fuels are termed as D + 50Fe and PB20 + 50Fe, respectively. Experiments are conducted on a developed diesel experimental setup to evaluate the engine performance and exhaust emissions for the fuels, namely, D, PB20, D + 50Fe, and PB20 + 50Fe. Results indicate that the density, viscosity, and calorific value of the fuel blends tend to increase with the addition of nanoparticles in the blends. Brake thermal efficiency (BTE) gets enhanced by about 2.06% for PB20 + 50Fe and about 0.36% for D + 50Fe with respect to BTE of PB20 and D, respectively. Similarly, brake-specific fuel consumption (BSFC) is lowered by 2.71% for PB20 + 50Fe and by 1.55% for D + 50Fe. Emission of regulated parameters, i.e., hydrocarbon (HC), carbon monoxide (CO), and nitrogen oxides (NOx) emission, shows a reducing trend. Volumetric reduction in the emissions of HC by 3–6%, CO by 6–12%, and NOx by 4–11.16% is observed.

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