Research on alternative fuels is necessary to reduce CO2 emissions. Hydrotreated Vegetable Oil (HVO) of light fuel physically improves spray and combustion characteristics. Fatty Acid Methyl Ester (FAME) is an oxygenated fuel and its combustion characteristics are chemically improved, although its spray characteristics such as penetration and atomization are deteriorated. The purpose of this study is to understand the effects of blending HVO, which has carbon neutral (CN) characteristics, with FAME, which also has CN characteristics, on spray and combustion characteristics, and to further improve emission such as THC and Smoke. This report presents the effect of the combination of improved spray characteristics and oxygenated fuel on emissions. Spray characteristics such as penetration, spray angle and spray volume were investigated by shadowgraph photography. Also, combustion characteristics such as heat release rate and emission were investigated using a single-cylinder diesel engine. As a result, with blending of HVO and FAME, by increasing the percentage of HVO, lower the fuel density and kinematic viscosity, forming a low penetration and high dispersion spray. In addition, entrainment is promoted and the spray volume tends to increase. The emission performance was found to be significantly affected by chemical effects. Furthermore, blended fuel can reduce THC and Smoke emissions compared to gas oil, while keeping the same NOx levels. Therefore, blended fuel can improve emission performance without affecting the environmental impact, and is a promising alternative fuel to gas oil.