1,4 dioxane, a new additive allows the splash blending of ethanol in diesel in a clear solution. The objective of this investigation is to first create a stable ethanol-diesel blended fuel with 10% 1,4 dioxane additive, and then to generate performance, combustion and emissions data for evaluation of different ethanol content on a single cylinder diesel engine with and without thermal barrier coating. Results show improved performance with blends compared to neat fuel for all conditions of the engine. Drastic reduction in smoke density is found with the blends as compared to neat diesel and the reduction is still better for coated engine. NOx emissions were found to be high for coated engines than the normal engine for the blends. The oxygen enriched fuel increases the peak pressure and rate of pressure rise with increase in ethanol ratio and is still superior for coated engine. Heat release pattern shows higher premixed combustion rate with the blends. Longer ignition delay and shorter combustion duration are found with all blends than neat diesel fuel.