This paper discusses the results of the first and second law analysis of a 4-cylinder, 4-stroke, Water-cooled, naturally aspirated, Direct injection diesel engine using the conventional petro-diesel as well as biodiesel made from waste cooking oil.This was done using the dynamometer test setup. The engine speed was limited to 2250 rpm (maximum range is 3000 rpm) due to excessive engine vibration. The test was carried out at full engine throttle. At first, the oil was collected and chemically treated and converted to biodiesel. Then, after servicing the engine, it was tested using the conventional petro-diesel used in Jordan and the base performance was recorded. Then, biodiesel was used and tested under similar conditions and the performance parameters were recorded. Finally, the first and second law parameters were calculated and compared. It was found that Biodiesel has 10% lower heating value on weight basis compared with petro-diesel. Petro-diesel showed minimum specific fuel consumption of 295 g/kW-h with compared with 348 g/kW-h for biodiesel at 22 rps. Maximum torque was 44.8 N-m obtained at 20 rps for biodiesel and 43.25 N-m at 25 rps for petro-diesel. Shaft availability increased from -14% to 10% for low and high speeds, respectively, for biodiesel, while availability lost to coolant was 10-15% higher for petro-diesel fuel.