Because of possible future energy crises, it is increasingly desirable to search for alternative and renewable energy resources. This paper presents a detailed experimental study of direct combustion of a diesel and olive-cake (OC) slurry in a vertical, cylindrical, water-cooled combustor. An air-atomized nozzle was used in this study and experiments were undertaken to characterize the atomizer’s performance. Axial and radial flame temperature profiles, the heat transfer distribution for the wafer jacket, flame stability and combustion efficiency were obtained over wide ranges of air:fuel ratios, and at different percentages of OC in the diesel fuel. The rate of heat transfer to the water jacket and the combustion efficiency were improved as the percentage of OC in the diesel fuel was increased to 7 wt%. Also, as the percentage of OC in the diesel fuel increased, the stability loop became narrower. Stable flames were observed for up to 20 wt% of OC. Based on these results and on the availability of the OC, it may be concluded that the potential of OC as a source of energy is significant.