The current study emphasis on the engine performance and emission characteristics of rapeseed and soya biodiesel dispersion on a novel nanocatalyst at different concentrations of 25 ppm and 50 ppm. The results of this study were compared with those of conventional diesel at varying load conditions on a combustion ignition engine. An α-Fe2O3-doped Al2O3 was mixed with rapeseed biodiesel and soya biodiesel using an ultrasonicator at a frequency of 25 kHz. This study revealed that the incorporation of nanoparticles in biodiesel enhanced the performance of the blends by reducing the content of lignin and other unsaturated fatty acids. The improvement in the performance of the engine is mainly attributed to the high area-to-volume ratio of the nanocatalyst. Emissions of NOx. hydrocarbon and carbon monoxide during the combustion reaction increased significantly when nanoparticles were added at higher concentrations. Contrastingly, the emission of NOx in pure biodiesel was higher than that in conventional diesel. The addition of nanoparticles reduced CO emissions due to the presence of extra oxygen molecules and converted carbon monoxide into carbon dioxide. Soya seed biodiesel blends with 50 ppm nanoparticles showed better engine performance and emission characteristics as compared with all other blends.