The Diesel engine is expected to be available for operation at high altitude. However, power loss and emission deterioration have been plaguing highland Diesel engines. Therefore, this study aimed to investigate the impact of altitude on the performance and combustion characteristics of Diesel engines that is limited discussed in existing studies. The research was conducted by varying the altitude from 0-4500 m using a research Diesel engine and analyzing the combustion characteristics at different combustion phases with the help of triple Wiebe function. The results indicated a noticeable drop in power output with increasing altitude, and the deterioration of performance and emissions became significant when the altitude exceeded 3000 m. Specifically, the indicated specific CO, unburned hydrocarbon, and soot emissions increased while nitrogen NOx showed a reverse trend. Additionally, it was found that the lower cylinder pressure at high altitude extended the ignition delay and caused a higher heat release rate in the premixed combustion stage. Moreover, the high altitude condition shortened the duration of combustion and reduced the energy release fraction in the diffusion phase. Furthermore, the late combustion phase occurred earlier and lasted longer at high altitude, which consequently reduced the combustion and thermal efficiency. The most important finding is that the engine performance, especially the combustion efficiency, shows an abrupt degradation with altitudes above 3000 m. As a result, engines operating at extremely high altitudes require multi-stage turbocharging to compensate for combustion deterioration.