The main objective of this paper is to provide the analysis of the diesel engine such as performance & characteristic curves, fuel economy, power developed and exhaust emission levels; when the four stroke internal combustion compression ignition diesel engine is fueled with soybean biodiesel (B100 with 5% ethanol) and petroleum diesel. The various parameters have been evaluated for each of the fuel used such as brake power developed, specific fuel consumption, indicated thermal efficiency, brake thermal efficiency, mechanical efficiency and exhaust emission gas levels of CO, HC, CO2, O2 and NOx and comparisons of them have been given. In addition to B100 and petroleum diesel, different blends of pure biodiesel such as B25, B50 and B75 have also been analyzed, compared among each other and shown. The aim of this paper is to prove that Soybean Oil: Biodiesel is the most sustainable alternative and renewable fuel, which not only shows similar performance characteristics, fuel consumption & efficiencies with respect to petro-diesel, but also shows reduction in amount of pollution causing gases in exhaust when compared with the same.