The evaporation characteristics of a nanofluid fuel blended with different concentrations (0.05%, 0.25%, 1.25%, and 5% by weight) of ceria nanoparticles at ambient temperatures of 673 K and 873 K under normal gravity were investigated; the evaporation characteristic of pure diesel was also considered for comparison. The results show that the ambient temperature significantly influences the evaporation rate of the nanofluid fuel droplet. However, the addition of ceria nanoparticles could cause the fuel droplet to experience repeated and intense micro-explosions at 873 K; this occurrence of micro-explosions is the most important factor for increasing the droplet evaporation compared to pure diesel. The evaporation enhancement for nanofluid fuel droplets was found to increase from ceria concentrations of 0.25% to 1.25%, and decrease from ceria concentrations of 1.25% to 5% at an ambient temperature of 873 K. Moreover, the nanoparticles accumulate on the edge of the droplet, eventually forming a porous spherical shell on the surface at 673 K, and this shell inhibits evaporation of the nanofluid fuel droplet compared to pure diesel. Finally, a conceptual model of the evaporation mechanism for nanofluid fuel at ambient temperatures of 673 K and 873 K were proposed.