The search for suitable alternative for fossil fuel has been a challenge to the research community for the past two decades. So many alternatives have been identified and tested. However, a complete replacement cannot be provided without any penalties of cost, excess emission, poor operation, etc. The alcohols gave a new opportunity and a solution for that problem but had some setbacks of increased density and lower octane number. The present work focuses on striking a balance between advantages and disadvantages by using oxygenated additive with gasoline fuel. The additive CeO2 along with methyl tertiary butyl ether (MTBE) offers many advantages. The seven samples, namely M10, M15, M20, M25, M20 + 50 mg/l, M20+100 mg/l, M20+150 mg/l have been prepared and tested on spark ignition engine. Here, 10, 15, 20, and 25 denote the MTBE volume in blends and 50 mg/l, 100 mg/l, and 150 mg/l indicate the CeO2 in blends. The results have shown that only MTBE has caused an increase of 4% in brake thermal efficiency with M15 and then brake thermal efficiency has improved by 3% with M15 + 100 mg/l compared with pure gasoline. Fuel consumption has also been reduced upto 9% with M20 and 11% with M15+150 mg/l compared with pure gasoline. The maximum HC and CO reductions have also been observed from M20 and M20 + 150 mg/l. It was up to 19% and 22%, 23%, and 25% of HC and CO with M20, M20 + 150 mg/l. However, there has been an increase in CO2 emission level because of excessive unburned HC reduction. The MTBE with CeO2 has proved to be suited to all running conditions. The blends having more amounts of additive produce good combustion characteristics yet it should be restricted within 20 vol.% of MTBE and 150 mg/l of CeO2.