These days, our environmental pollution has been greatly threatened by various exhaust emissions from diesel engines for transportation, and there is a tendency that regulations on this are very strengthened. In this study, when biodiesel and water-cooled EGR are simultaneously applied to common rail diesel engines, which occupy most of passenger diesel engines, the characteristics of exhaust smoke and NOx were investigated. As a result of this experiment, as a result of applying less than 10% EGR to 5% biodiesel mixed fuel, it was found that smoke and NOx emissions can be simultaneously reduced.