The purpose of this study is to investigate experimentally the effect of low purity methanol (LPM) on performance and smoke emission characteristics by using a four-cycle, four-cylinder, water-cooled, direct injection diesel engine with EGR system. The experiments are performed by the change of engine load in the engine load ranges of 25 to 100% with an interval of 25% under the constant engine speed of 2000 rpm. The LPM in the fuel blends contained 24.88% water by volume. The blended fuel ratios of diesel oil to LPM are maintained at 100/0, 95/5, 90/10 and 85/15% on the volume basis. In this paper, EGR rates are varied in three conditions of 0, 12.8 and 16.5%. The result shows that the brake power of a blended fuel with 15% LPM is reduced more 11.1% than that of the neat diesel oil at the full load with the EGR rate of 16.5%. At this condition, also, the brake specific fuel consumption (BSFC) is increased by 3.2%, the exhaust gas temperature is decreased by 10.7%, the smoke opacity is decreased by 18.7% and the brake thermal efficiency is increased by 7.3%. The sharp reduction of smoke opacity for a blended fuel with the LPM content of 15% at the full load without EGR system is observed by 68.4% compared with that of the neat diesel oil due to the high oxygen content of LPM.