Despite a number of efforts to evaluate the utility of water-diesel emulsions (WED) in CI engine to improve its performance and reduce its emissions in search of alternative fuels to combat the higher prices and depleting resources of fossil fuels, no consistent results are available. Additionally, the noise emissions in the case of WED are not thoroughly discussed which motivated this research to analyze the performance and emission characteristics of WED. Brake thermal efficiency (BTE) and brake specific fuel consumption (BSFC) were calculated at 1600 rpm within 15%–75% of the load range. Similarly, the contents of NOx, CO, and HC, and level of noise and smoke were measured varying the percentage of water from 2% to 10% gradually for all values of loads. BTE in the case of water emulsified diesel was decreased gradually as the percentage of water increased accompanied by a gradual increase in BSFC. Thus, WED10 showed a maximum 13.08% lower value of BTE while BSFC was increased by 32.28%. However, NOx emissions (21.8%) and smoke (48%) were also reduced significantly in the case of WED10 along with an increase in the emissions of HC and CO and noise. The comparative analysis showed that the emulsified diesel can significantly reduce the emission of NOx and smoke, but it has a negative impact on the performance characteristics and HC, CO, and noise emissions which can be mitigated by trying more fuels variations such as biodiesel and using different water injection methods to decrease dependency on fossil fuels and improve the environmental impacts of CI engines.