A novel emulsion fuel with nano-organic additives is introduced in this work. Unlike other emulsion fuels (opaque and milky in color) developed around the world, it is transparent and light green with superior stability. The performance and emissions of the emulsion fuel in a diesel engine with common-rail fuel supply system are tested and compared with pure diesel. The results indicate that the micro-explosion phenomenon of the nano-sized water droplets in the emulsion fuel can accelerate fuel evaporation and its mixing process with air, reducing the overall combustion duration. When 10% emulsion fuel was used, the brake thermal efficiency of the engine was significantly improved by 14.2% compared to pure diesel, and the NOx emissions was also reduced by 30.6%. (C) 2012 Elsevier Ltd. All rights reserved.