Water-in-diesel emulsions have garnered attention in recent years as a potential route to mitigate vehicular pollution. In this work, the formation, flow behavior, and microstructure of water-in-diesel microemulsions using an anionic surfactant, sodium bis(2-ethylhexyl) sulfosuccinate (AOT), is investigated and compared with the water-decane-AOT microemulsion system. Rheological measurements on the microemulsions indicate Newtonian behavior over a moderate range of shear rate. The viscosity of the microemulsions shows a weak dependence on the molar ratio of water-to-surfactant (omega) but increases significantly with the increase in the dispersed phase volume fraction (Phi). Dynamic light scattering (DLS) investigation of the microemulsions indicates a single exponential decay of the intensity autocorrelation functions over a wide range of water and AOT concentrations, indicating that the dispersed phase consists of a monodispersed population of water droplets. Results suggest that optimizing omega can regulate the mean diameter of droplets in the water-in-diesel emulsion fuel and a control over the number density of droplets can be achieved by independently varying Phi without altering the droplet dimension. Assessment of storage stability of the emulsified fuels showed no change in the diameter of the droplets for more than six months. We show that thermoreversible formation of water-in-diesel emulsions of nearly identical diameter when the diesel based microemulsions are subjected to repeated cooling and heating cycles provides further proof of their thermodynamic stability. Therefore, microemulsion fuels with excellent time-stability, compared to the more studied kinetically stable emulsion fuels, could be more suitable candidates as alternative fuel.