The present study aims to evaluate the emission and performance characteristics of a CI engine using biodiesel blends with three different nanoparticles. Biodiesel was prepared from palm oil using transesterification process. Biodiesel yield has been optimized using response surface methodology, which develops an interaction among the independent operating parameters reaction temperature methanol to oil ratio, and catalyst concentration, where they are changed as follows: 50–65 °C, 5:1–12:1, and 0.25–1.75, respectively. Nano fuel blends were prepared by dispersing CNT, TiO2 and Al2O3 nanoparticles into the B30 blend. The stability of these nanoparticles was improved by adding sodium dodecyl sulfate (SDS) as a surfactant, and the stability was characterized by ultraviolet–visible spectrometry. These nanoparticles were mingled with palm methyl ester at a proportion of 100 ppm using an ultrasonication water bath. The engine performance and emission characteristics were determined at varying engine speed and a full load condition. At all engine speeds, B30 with Al2O3 ternary fuel blend exhibits a promising reduction in brake specific fuel consumption (BSFC) of 5.98%. A significant improvement of 9.83%, 3.91% and 1.37% in brake thermal efficiency (BTE) has been observed for Al2O3, CNT, and TiO2 additives as compared to B10 blend, respectively. B30 with TiO2 ternary blend shows a sharp reduction of 27.89% and 30.68% in the CO and HC emissions respectively, and 10.37% decrease in NOx level with the addition of CNT as a fuel additive in the ternary fuel blend. Palm biodiesel blended with nanoparticle additives enhanced both engine performance and emission characteristics.