Abstract. Magnetization, specific heat, magnetocaloric effect, and neutron diffraction measurements have been performed in order to better understand the magnetic interactions and phase transitions in the diluted antiferromagnetic system EuxSrl_xTe. Due to the low N6el temperature of TN=9.8 K and the associated small critical field of Be(T= 0)= 7.5 T, EuTe provides the opportunity to change the angle between the antiferromagnetic moments continuously between 180 ~ and 0 ~ by applying a magnetic field and allows thus to probe the type of the magnetic interaction. It is found that in addition to the common bilinear Heisenberg exchange mechanism there is evidence for a small biquadratic exchange term, which has important consequences on the critical behaviour of EuxSr~_xTe. In the case of EuTe the biquadratic exchange supports the antiferromagnetic order, such that virtually no anisotropy exists and this restricts the antiferromagnetic (AF) to spin-flop (SF) transition to B0 = 0. On dilution with strontium, the biquadratic interaction decreases strongly and changes its sign at x~0.83 thus favouring the perpendicular moment orientation. This acts like an anisotropy on the dominating antiferromagnetic bilinear interaction and shifts the AF-SF phase line to finite fields which reach values of 0.3 T for T~ 0. No bicritieal behaviour is observed, but instead, the SF phase is the state of lowest energy in a small temperature interval below TN. The critical exponent ~(x) of the specific heat decreases in a non-linear way with dilution starting from a large positive value for EuTe. e(x) is close to the Heisenberg value -0.12 near x~0.83 where the biquadratic interaction is zero. The same applies for the exponent fl of the sublattice magnetization.