Increased environmental awareness and depletion of resources are driving industry to develop alternative fuels that are environmentally more acceptable. In present investigation, biodiesel from rice bran oil is developed and characterised as per ASTM D6751 and found to be comparable with mineral diesel. Steady state engine dynamometer tests have been carried out to evaluate the performance and emission characteristics (ECE R49 test cycle) of a medium duty transportation direct injection diesel engine fuelled with various biodiesel blends ranging from B00 to B100. Combustion characteristics of the same engine running with diesel, biodiesel and B20 (20% biodiesel) blend have been investigated. In addition, endurance tests were conducted under predetermined loading cycles in two phases: engine operating on mineral diesel and engine fuelled with B20 blend. To quantify the wear of cylinder liner, surface parameters and scanning electron microscopy (SEM) at different location in the liner were done. Wear metal analysis and ferrography of lubricating oil samples drawn from both phase of engine operation were also carried out.