Vegetable oil has become more attractive recently because of its environmental benefits and better quality exhaust emission. A well-known transesterification process made biodiesel, pungam seed oil was selected for biodiesel production. Pungam seed oil is non-edible oil, thus, food versus fuel conflict will not arise if this is used for biodiesel production. A maximum of 75% biodiesel was produced with 20% methanol in the presence of 0.5% sodium hydroxide. The experimental investigations were carried out in an engine that is coupled with an eddy current dynamometer. The engine is a single cylinder water-cooled, direct injection diesel engine developing a power output of 3.7 kW at 1500 rev/min. The crank angle encoder measured the engine speed, whereas the piezo electric sensors measured the cylinder pressure and the fuel injection pressure. The experimental investigations were carried out for bio-diesel and diesel and the results were compared. From the experimental results, it is concluded that the use of bio-diesel as an alternative fuel leads to significant reduction in emissions and improved performance of diesel engines. This paper discusses the production process of biodiesel from Pungam seed oil and its performance in the compression ignition engine.