Recently the world is faced with the very serious problems related to the increasing use of the conventional petroleum fuels. THe air pollutions in big cities were also occurred by the exhaust emissions from automobiles. many researchers have been attracted various oxygenated fuels as an alternative fuel and a renewable fuel for the measure of these problems. In this study the effect of oxygen in fuel on the exhaust gas emissions has been investigated with oxygenated fuels as an alternative fuel for diesel engine. The exhaust gas emission were investigated by comparing with that of the diesel fuel. The vegetable fuel oil such as soybean oil gives lower smoke level than that with diesel fuel. Furthermore the smoke emission is more affected by the oxygen content in fuel than by the fuel viscosity. This study concluded that the fuels including oxygen might be a good measure to reduce smoke in diesel engine because the oxygen strongly influenced the combustion process.