This article investigates the utility of waste tyre oil as a potential source of partial replacement of diesel fuel. The experimental study of engine parameters such as performance, emissions, along with combustion characteristics of tyre oil blends with cerium oxide (CeO2) and without CeO2 nano additive in a four‐stroke single‐cylinder water‐cooled compression ignition engine was conducted without any engine adjustment. Tyre oil was blended with diesel fuel at the volumetric proportions of 5, 10, 15, and 20%. These experimental results reveal that B5 blend has increased Brake thermal efficiency compared to other blends and nearer to diesel fuel at full load. The emissions of Hydrocarbon (HC), smoke are lower than diesel fuel by 3, 3.22% for B5 blend of full load. If CeO2 nano additives are doped with tyre oil blends in such case the B5D85 + CeO2 100 ppm blends were increased in efficiency of 2.85% and emissions like HC, CO, Smoke are decreased by 3, 1.33, 7.7%, respectively compared to diesel. From the experimental results, B5D85 + CeO2 100 ppm fuel blend is the best fuel ratio for a CI engine for increased efficiency, reduced emission and better combustion. Hence, the tyre oil with CeO2 nano additives is a suitable alternative fuel for CI engine.