This paper presents the results of investigations carried out on performance of Karanja methyl ester and its blends with diesel from 20%, 40% and 60% by volume for running a diesel engine.  Performance tests were carried out to evaluate and compute power output.  The engine was tested with the above test fuels and at two injection pressures i.e. 180 kg/cm2 and 245 kg/cm2 and temperatures of 30, 50 and 70° C. Statistical analysis  was done by using Factorial Completely Randomized Design.  The increase in power output, brake thermal efficiency and redcution in brake specific fuel consumption were observed.  Injection pressure and fuel  temperature were found to have significant effects on engine performance parameters.  The power output decreased with increase in the concentration of karaja methyl ester in diesel and increased  with the increase in injection pressure and fruil temperature.  Blend of karanja esterified oil (B2O) was found a suitable alternative fuel for diesel.