In this study, two diesel blends with different iso-butanol and isopropyl alcohol ratios, 5% iso-propanol with 15% iso-butanol and 1% iso-propanol and 19% iso-butanol, were used and compared against the performance of petroleum diesel as a base fuel. Additionally, water addition strategy was included for further comparison. Brake specific fuel consumption (BSFC) increased with increasing ratios of iso-butanol and water fractions, since the heating value decreased resulting in more fuel being combusted to maintain the same power output. On the other hand, brake thermal efficiency (BTE) increased with increasing water content. Specifically, P5B15W1 had a higher BTE than regular diesel at low engine loads (12 kW and 25 kW-LS). Compared to the regular diesel, the results show that in-cylinder pressures slightly increased while HRR had longer ignition delay with higher iso-butanol and water content. For the two different ratios of blended diesel, P1B19 registered NOx emission reductions factors by about 12–35% compared regular diesel due to its low heating value and combustion temperature, while those for P5B15 were reduced 8–33% in comparison to regular diesel. For CO and PM emission factors, P5B15 had better performance than P1B19 which showed 13–37% and 37–50% lower than regular diesel, respectively. However, HC emission factors were all greater than those of regular diesel with the highest increase being from P1B19. This diesel blend, P1B19 showed 6–30% and 3–10% higher HC emission factors than regular diesel and P5B15, respectively. For water containing blends, NOx emission factors decreased with an increase in water content. The trends for CO and PM emission factors were similar to those of non-water containing diesel blends. P5B15W1 had largest decrease which showed 5–17% and 7–26% lower CO and PM than regular diesel, respectively. Notably, the CO and PM emission factors are all higher than non-water contain blended diesel. As for HC, P5B15W1 had an increase of about 26–51%. Moreover, the total-PAHs emission factors between two different ratios of blended diesel were compared whereby P5B15 had 12–22% lower than P1B19. Besides, total-BaPeq emission factors are similar to total-PAHs emission, which P5B15 had largest reduction by 28–44%. In summary, P5B15 would be a best choice in terms of PM reduction, while the best choice for NOx control would be P1B19W0.5 blend. Ultimately, further economic feasibility studies are recommended for an overall performance evaluation.