Creating a clean and safe environment has always been a challenge for researchers throughout the world. The use of fossil fuel has been a deterrent in attaining this objective. Therefore, attention has been focused on biofuels to suit this objective. In recent years, efforts have been directed towards environmentally friendly sources of alternate fuels for diesel engines. This paper compares the performance and emission characteristics of biofuels with mineral no. 2 diesel oil. A direct injection diesel engine coupled with an eddy current dynamometer is used for this investigation. Rice bran oil and neem oil are considered as biofuels for this work since they are renewable in nature. Rice bran oil is extracted from rice bran, which is a by‐product of the rice milling process. Neem oil is derived from neem seed, which are abundantly available in India. In addition to these oils, their blends with diesel are also used to test their ability for reducing emissions. This study indicated that, among the two biofuels, the rice bran oil and its blend shows better results with respect to emissions than the neem oil and its blend. The results for the rice bran oil and its blend are slightly better than those of diesel and superior to pure neem oil and its blend. The unburned hydrocarbon (UBHC) emissions of biofuels and their blends are lower when compared with diesel. Biofuels show lower nitrogen oxide (NOx) emissions when compared with diesel and biofuel blends. It was observed that the smoke intensities of all the fuels tested are similar up to 50% loads. At higher loads, biofuels and their blends showed slightly higher smoke intensities than diesel.