The smoke emission of biodiesel fuel was reduced remarkably in comparison with diesel fuel, that is, it was reduced approximately 36% at 2000rpm, full load condition. And, power, torque and brake specific energy consumption showed no significant differences. However, NOx emission of biodiesel fuel was increased compared with commercial diesel fuel. Also, the effects of exhaust gas recirculation(EGR) to reduce the NOx emission has been investigated. It was found that simultaneous reduction of smoke and NOx was achieved with biodiesel fuel(20vol-%) and cooled EGR method(10∼15%).