The major difference of vegetable oil fuels from conventional diesel is its high viscosity. Attempt to reduce the viscosity of the palm oil diesel (POD) by preheating the fuel was performed and comparison on the basis of its projected chance of leading to "diesel-like" combustion was also carried out with conventional diesel fuel. It was observed that by preheating the POD fuel above the conventional temperature, the engine performance, especially the brake power output is improved, approaching to "diesel-like" performance and the exhaust emissions is much cleaner. This is mainly attributed to the fact that as the fuel is preheated the viscosity is reduced close to ordinary diesel (OD) fuel. This will result in improved pray and atomization characteristics. Torque, brake power, specific fuel consumption, exhaust emissions, rake thermal efficiencies were measured and calculated. The potential for improved engine performance and reduction in emissions levels were demonstrated.