With growing concern over greenhouse gases there is increasing emphasis on reducing CO2 emissions. Despite engine efficiency improvements plus increased dieselization of the fleet, increasing vehicle numbers results in increasing CO2 emissions. To reserve this trend the fuel source must be changed to renewable fuels which are CO2 neutral. As a renewable, sustainable and alternative fuel for compression ignition engines, biodiesel is widely accepted as comparable fuel to diesel in diesel engines. This is due to several factors like decreasing the dependence on imported petroleum, reducing global warming, increasing lubricity, and reducing substantially the exhaust emissions from diesel engine. However, there is a major disadvantage in the use of biodiesel as it has lower heating value, higher density and higher viscosity, higher fuel consumption and higher NOX emission, which limits its application. Here fuel additives become essential and indispensable tools not only to minimize these drawbacks but also generate specified products to meet the regional and international standards. Fuel additives can contribute towards fuel economy and emission reduction either directly or indirectly. Their use enable vehicle performance to be maintained at, or near, optimum over the lifetime of the vehicle. A variety of additives are used in automotive biodiesel fuel to meet specification limits and to enhance quality. For example, metal based additives, oxygenated additives, antioxidants, cetane number improvers, lubricity improvers and cold flow improvers are used to meet specifications and quality. This article is a literature review of the effect of various additives on biodiesel properties, engine performance and exhaust emission characteristics and the corresponding effect factors were surveyed and analyzed in detail. The review concludes that the use of additive in biodiesel fuel is inalienable both for improving properties and for better engine performance and emission control. Therefore, in order to find the appropriate fuel additives in the combustion applications, more experiments are needed to explore the different related mechanisms. (C) 2014 Elsevier Ltd. All rights reserved.