For controlling oxides of nitrogen (NOx) and particular matter (PM) emissions from diesel engines, various fuel and combustion mode modification strategies are investigated in the past. Low temperature combustion (LTC) is an alternative combustion strategy that reduces NOx and PM emissions through premixed lean combustion. Dual fuel reactivity-controlled compression ignition (RCCI) is a promising LTC strategy with better control over the start and end of combustion because of reactivity and equivalence ratio stratification. However, the unburned hydrocarbon (HC) and carbon monoxide (CO) emissions are significantly higher in RCCI, especially at part-load conditions. The present work intends to address this shortcoming by utilizing oxygenated alternative fuels. Considering the limited availability and higher cost, replacing conventional fuels completely with alternative fuels is not feasible. Based on this premise, oxygenated alternative fuel blends, viz. methanol and Karanja biodiesel with 20 vol. % in gasoline and diesel, respectively, is used as a port and direct-injected fuels in RCCI. A light-duty diesel engine used for agricultural water pumping applications is modified to run in RCCI through suitable intake and fuel injection systems modifications. The engine combustion, performance, and exhaust emissions with oxygenated fuel blends are compared with gasoline and diesel as a port and direct-injected reference fuels. The results obtained show that the HC emissions are reduced by up to 44% with oxygenated fuel blends. Further, the indicated thermal efficiency is increased by ~20%, and the indicated specific fuel consumption is reduced by ~10% with oxygenated alternative fuel blends. Overall, fuel-bound oxygen and a much wider reactivity variation with oxygenated alternative fuel blends result in improved combustion efficiency, lower HC emissions, and higher thermal efficiency in RCCI. Thus, oxygenated alternative fuel blends could be a promising option to improve combustion efficiency in RCCI.