In this work a novel, low-cost and simple method is used for synthesis of calcium hydroxide nanoparticles having dumb bell like morphology. The composition and purity of the product are analyzed by X-ray diffraction analysis. The morphology of the product is analyzed by scanning electron microscopy and transmission electron microscopy. The formation mechanism of dumb bell shape from trigonal unit cells is also proposed here. The thermal conductivity, thermal diffusivity and specific heat of product are measured in 303-533 K temperature range. Thermal conductivity increases from 0.49 to 0.69 W/mK with increase in temperature from 303 to 533 K. The thermal diffusivity decreases from 79.0 to 46.2 mm(2)/s with increase in temperature from 303 to 333 K and it increases from 46.2 to 53.2 mm(2)/s with increase in temperature from 333 to 533 K. Specific heat of product is sharply increased from 3.1 to 5.4 MJ/m(2) K on increasing temperature from 303 to 333 K temperature. Moreover the physical and combustion characteristics of fuel (diesel) are studied at 0, 10, 20 and 40 ppm dosages of product. The calorific value of fuel is increased from 0.95 to 41.93 MJ/kg with increase in additive dosage from 0 to 40 ppm. Flash point and fire point of fuel are increased by 7.5 and 9.5 degrees C with addition of 40 ppm additive respectively. Specific gravity is increased from 0.1149 to 0.3472 g/cm(3) by increasing the additive dosage from 0 to 40 ppm. Kinematic viscosity of fuel is increased from 2. 68x10(-6) to 3.2 x 10(-6) m(2)/s with increase in additive dosage from 0 to 40 ppm.