A reduced n-heptane-toluene-n-butanol-polycyclic aromatic hydrocarbon (PAH) combustion mechanism was developed for a blended fuel of n-butanol and diesel, including 101 species and 531 reactions. A sensitivity analysis was conducted for the optimization of the mechanism. The optimized mechanism was widely validated with ignition delays, laminar flame speeds, species concentrations in premixed flame and counterflow flame, and homogeneous charge compression ignition (HCCI) engine combustion. According to the validation results, the optimized mechanism shows favorable predictions, especially on the important species related to the PAH formation. Moreover, the reduced mechanism was coupled with computational fluid dynamic (CFD) to conduct direct injection compression ignition (DICI) engine tests within a wide range of exhaust gas recirculation (EGR) ratio and also shows favorable prediction results. Therefore, the proposed mechanism can be used to simulate the combustion of diesel or n-butanol-diesel blends in multi-dimensional CFD modeling. Besides, the main formation pathways of benzene (A(1)), a precursor of soot, were analyzed in a single-zone HCCI engine model. Results show that, in addition to the traditional pathways of 'C-4 + C-2' and 'C-3 + C-3', toluene was quite crucial to produce A(1). The counterflow flame validation tests also demonstrated the importance of the addition of toluene to the PAH and soot formation. In the early combustion period, C6H5OH significantly contributed to the formation of A1, while toluene directly produced a large amount of C6H5CH2 and thus promoted the formation of A(1). In the middle combustion period, OC6H4CH3 played an important role in the formation of A1, while toluene made less contribution.