The objective of this study was to find out the technical feasibility of ethanol-diesel fuel blends as a diesel engine fuel. Fuel properties essential to the proper operation of a diesel engine were determined for blends containing several concentrations of ethanol in No. 2 diesel fuel. A single-cylinder diesel engine for a power tiller was used for the engine tests, in which load, speed and fuel consumption rate were measured. The fuels used in tests were No. 2 diesel fuel and a blend containing 10-percent ethanol and 90-percent No. 2 diesel fuel. The results of the study are summarized as follows. 1. It was not possible to blend ethanol and No. 2 diesel fuel as a homogeneous solution even though anhydrous ethanol was used. The problem of blending ethanol in No. 2 diesel fuel could be solved by adding butanol about 5% of the amount of ethanol in the blends. 2. Because ethanol had a much lower boiling point ($78.3^{circ}C$ under atmospheric pressure) than a diesel fuel, it was necessary to store ethanol-diesel fuel blends airtight in order to prevent them from evaporation losses of ethanol. 3. The addition of ethanol to No. 2 diesel fuel lowered the fuel viscosity and the cetane rating, but a blend of 10% ethanol and 90% diesel fuel had a viscosity and a cetane rating well above the KS minimum values for No. 2 diesel fuel. 4. At the rated speed, the specific fuel consumption of No.2 diesel fuel was lower than that of the 10% ethanol blend for the almost entire range of load. However, under the overload condition the specific fuel consumption was lower for the 10% ethanol blend. 5. Under the variable-speed full-load tests, both fuels produced approximately the same torque and power. At the speeds of 1600rpm or below, the specific fuel consumption of No. 2 diesel fuel was lower than that of the 10% ethanol blend. At the speeds of 1600rpm or above, however, the specific fuel consumption was lower for the 10% ethanol blend. 6. At the ambient temperature above $15^{circ}C$, the use of the 10% ethanol blend in the engine created a vapor lock in the fuel injection pump and stalled the engine. The vapor locking problem was overcome by chilling the surroundings of the fuel injection pump and the cylinder head with water.