In this study, the impact of methanol-diesel fuel blends on the performance and exhaust emissions of a four-cylinder, four-stroke, direct injection, turbocharged diesel engine was experimentally analyzed. This investigation was conducted in response to increasingly strict regulations on exhaust emissions for newly manufactured diesel engines. The blends used had methanol content ranging from 0% to 5%, 10% with 15% increments. Engine performance tests were conducted on a dynamometer, varying engine speed from 1000 min⁻¹ to 2700 min⁻¹. The results reveal that although all fuels exhibit increased power output with rising engine speed, incorporating methanol results in a power reduction of approximately 4% for M5, 9% for M10, and 13% for M15 compared to pure diesel. Conversely, the brake specific fuel consumption (BSFC) improves with methanol addition, decreasing by roughly 5%, 10%, and 14% for M5, M10, and M15, respectively, which suggests enhanced combustion efficiency. Furthermore, carbon monoxide (CO) emissions drop significantly with higher methanol content, showing reductions of about 13%, 27%, and 40% for the M5, M10, and M15 blends, respectively, relative to standard diesel. Balancing the observed trade-offs between power loss and efficiency gains, the 10% methanol blend (M10) emerges as the optimal fuel mixture, offering substantial improvements in fuel economy and emission reductions with only a moderate decrease in engine power.