Harmful exhaust emissions of diesel engines are recognized as main causes of air pollution in these days. But, the direct injection diesel engine is widely used for sake of minimization on energy consumption. Because biodiesel fuel is a renewable and alternative fuel for a diesel engine, its usability is expanded. To investigate the effect of biodiesel fuel(extracted from rapeseed oil) on the characteristics of performance and exhaust emissions in an agricultural diesel engine, the biodiesel fuel derived from rapeseed oil was applied in this study. Smoke emission of esterified rapeseed oil was reduced remarkably by approximately 44.5% at 1500 rpm, full load in comparison with the commercial diesel fuel. The power, torque and brake specific energy consumption of the diesel engine showed very slight differences. It was concluded that esterified rapeseed oil could be utilized effectively as an alternative and renewable fuel for agricultural direct injection diesel engines.