Effect of carbon nanotube emulsified fuel in a single-cylinder water-cooled four-stroke diesel engine was studied. CNT were produced by indigenous flame synthesis method. Water diesel emulsion was prepared in the proportion of 78% diesel, 20% water, and 2% surfactant with a HLB balance of 8. Tween 80 and Span 80 were used as surfactants. CNT in the mass fraction of 50 ppm, 100 ppm, and 150 ppm were blended in the water–diesel emulsion. CNT were dispersed in the water for 35 min with the help of ultrasonicator set at frequency of 40 kHz and ultrasonic power of 120 W, subsequently added in diesel, surfactant mixture to produce CNT blended water diesel emulsion. A mechanical homogenizer was used to produce emulsion at the speed of 3000 r/min for 25 min. The experimental investigation was carried out using single-cylinder diesel engine coupled with eddy current dynamometer and equipped with data acquisition system. An AVL Di-gas analyzer and AVL smoke opacity meter has been used to measure the exhaust emissions. Experiment was conducted at a constant speed of 1500 r/min from no load to full load for all fuel specimens. A comparative study involving combustion characteristics, brake specific fuel consumption, brake thermal efficiency, NOx, CO, HC, CO₂ were recorded for pure diesel, water diesel emulsion and CNT-emulsified fuel. The results have shown significant improvement in engine performance, combustions attributes and reduction in emissions using CNT-emulsified fuel.