In the present scenario, the utilization of petroleum fuel is expanding forcefully worldwide in the vitality store and plays a highly hazardous role in the ecological system. Biofuel stands out among the most tenable keys for this issue. The lemongrass oil is used as a biofuel because of low density and viscosity when compared with diesel. The lemongrass oil is extracted by steam distillation process. In the present investigation, partially stabilized zirconium, due to its higher thermal conductivity, is selected as coating material. The top surface of the piston and the inlet and exhaust valves are coated up to the preferred thickness of 500 μm by the plasma spray technique. The lemongrass emulsion fuel is prepared in the proportion of 94% of lemongrass oil, 5% of water, and 1% of surfactant span 80. The nanoparticles of cerium oxide were used with lemongrass oil (LGO) nano-emulsion in the measurement of 30 ppm. The four-stroke diesel engine execution, ignition, and the outflow extent were contrasted in the diesel and lemongrass oil (LGO) compared with the base diesel engine. The performance characteristic curves of lemongrass-cerium oxide nano-emulsion fuel show the increase in brake thermal efficiency of 17.21% when compared with the mineral diesel fuel. The emission characteristics of lemongrass-cerium oxide nano-emulsion fuel show a drop in hydrocarbon and carbon monoxide emission by 16.21% and 15.21%, respectively, when compared with base diesel fuel and also there is a decrease in oxides of nitrogen and smoke emission by 24.1% and 6.3%, respectively, when compared to mineral diesel fuel.