The raising of fossil fuel consumption due to rapid improvement in quality of human life-style, the deterioration of fossil fuel reserves and increased unwanted exhaust emissions caused in search for alternative renewable energy resources. In the recent days, the vegetable oil based biodiesel became a prominent and most promised viable source of alternative fuel, because of not only its nearer chemical characteristics to diesel, but also it is more environmental friendly than fossil fuel. The objective of the present research investigation is to evaluate the emission characteristics of a direct injection (DI) diesel engine when fuelled with methyl ester of neen oil (NOME) and its diesel blends. The experimental evaluation was carried out using a single cylinder, 4-stroke, water cooled diesel engine fuelled with neat neem oil biodiesel and its blends with diesel fuel at different ratios of 20:80, 40:60, 60:40, 80:20 and 100:0 on volume basis. The results revealed that neem oil and all its blends have lower CO emission, NOx emissions, but has highest unburned HC emissions than fossil diesel fuel. The B100 blend of NOME has lowest CO and NOx emission and B20 blend has lowest unburned HC emissions when compared with all other tested NOME biodiesel blends. It was also observed that the neem oil biodiesel is more eco-friendly than fossil diesel fuel.