Diesel engines exhausting gaseous emission and particulate matter have long been regarded as one of the major air pollution sources, particularly in metropolitan areas, and have been a source of serious public concern for a long time. The emulsification method is not only motivated by cost reduction but is also one of the potentially effective techniques to reduce exhaust emission from diesel engines. Water/diesel (W/D) emulsified formulations are reported to reduce the emissions of NOx, SOx, CO and particulate matter (PM) without compensating the engine's performance. Emulsion fuels with varying contents of water and diesel were prepared and stabilized by conventional and gemini surfactant, respectively. Surfactant's dosage, emulsification time, stirring intensity, emulsifying temperature and mixing time have been reported. Diesel engine performance and exhaust emission was also measured and analyzed with these indigenously prepared emulsified fuels. The obtained experimental results indicate that the emulsions stabilized by gemini surfactant have much finer and better-distributed water droplets as compared to those stabilized by conventional surfactant. A comparative study involving torque, engine brake mean effective pressure (BMEP), specific fuel consumption (SFC), particulate matter (PM), NOx and CO emissions is also reported for neat diesel and emulsified formulations. It was found that there was an insignificant reduction in engine's efficiency but on the other hand there are significant benefits associated with the incorporation of water contents in diesel regarding environmental hazards. The biggest reduction in PM, NOx, CO and SOx emission was achieved by the emulsion stabilized by gemini surfactant containing 15 water contents. © 2006 Elsevier Ltd. All rights reserved.