Ethanol was produced from saw dust of Masonia wood by means of simultaneous saccharification and fermentation process. The Ethanol produced was blended with Diesel in different proportions. The fuel properties of the Ethanol-Diesel (ED) blends at different temperatures and load conditions were experimentally investigated. The properties determined were relative density, cloud point, pour point, flash point, viscosity and the calorific value. The Diesel Engine Test Bed (Petter: PJ2W-type, 7227/22.5 BS) was used with ED blends having 5, 10, 15 and 20% ethanol with respectively 95, 90, 85 and 80% diesel on a volume basis to know the performance of the blends. The experimental results of the engine’s performance which include the brake power, brake specific fuel consumption, brake thermal efficiency for the fuel blends were analyzed to know the suitability of using ED blend in Compression Ignition engine. The results show that both the relative density and viscosity of the blends decreased as the ethanol content in the blends was increased. All the blends were found to have the same cloud point of 50C with that of diesel while their pour points vary and differ from that of diesel. All the blends have flash points 65% lower than that of diesel. The calorific values for ED5, ED10, ED15 and ED20 blends were 2, 3, 4 and 6% respectively less than that of diesel. The engine’s performance analysis indicated that there was an increase in brake thermal efficiency of the engine with increased proportion of ethanol in the fuel blends. The ED20 gave higher brake thermal efficiency than the diesel fuel at all load conditions. It was observed that at all loads conditions, the mass flow rate of ED20 was low so, resulting in decreased in specific fuel consumption. At all loads conditions, carbon dioxide emissions increased while hydrocarbon emissions decreased with increased amount of ethanol in the fuel blends, with ED20 showing the least emissions levels. Also, at all loads conditions, NOX emission of the blends was found to be higher than that of standard diesel due to the oxygen concentration and combustion timing. The results found showed that the ED20 (20% ethanol and 80% diesel) can be used in CI engine without any modification. The continuous rise in petroleum price, increasing threat to the environment from exhaust emissions from engines run on petroleum fuels and global warming have generated an intense international interest in developing alternative non-petroleum fuels for engines. Ethanol has been identified as one of the possible alternative fuels . Ethanol can be produced from crops with high sugar or starch contents. Some of these crops include; sugarcane, sorghum, corn, barley, cassava, sugar-beets, etc. Besides being a biomass based renewable fuel, ethanol has cleaner burning and higher octane rating than the various vegetable oils . Gasohol (a mixture of 10% alcohol with 90% gasoline) is already a commercial fuel in over 35 countries of the World including the USA, Canada and France. In Brazil, cars with modified engines have been running for years on neat alcohol.