The present article discusses the effect of cerium oxide nanoadditive inclusion on the working characteristics (combustion, performance, and emission) of water emulsified soybean biodiesel-fueled single cylinder Diesel engine. Test fuels with 5% and 10% volume of water in soybean biodiesel along with mass fraction of 100 ppm cerium oxide nanoparticle were prepared using mechanical agitator and ultrasonicator, and the experiments were conducted under different loading conditions in a single cylinder Diesel engine. The experimental results reveal that the emulsion fuel increases the peak in-cylinder pressure and net heat release values compared to pure soybean biodiesel, and cerium oxide nanoparticle inclusion reduces the peak combustion parameters value. The performance parameters such as brake specific fuel consumption and brake energy consumption are significantly improved with emulsion fuel, and the nanoparticle inclusion further improve the performance parameters. At low load conditions, the emulsion fuels increase the hydrocarbon and CO emissions, whereas these emission magnitudes are reduced at high load conditions. As far as the NOx and smoke emissions are concerned, an increase in water concentration directly reduces the emissions irrespective of load conditions. The cerium oxide nanoparticle inclusion reduces the emissions level from the water emulsified soybean biodiesel-fueled diesel engine.