In this study, an experimental investigation was carried out to evaluate the effect of Iron Oxide Nanofluids on the performance, emission and combustion characteristics of Low Heat Rejection (LHR) diesel engine operated with methyl esters of Waste Cooking Oil (WCOME). In the first phase of the work, single-cylinder, direct injection diesel engine test rig was developed and tested for its baseline readings with diesel at different power outputs. In the second phase of the work, the test engine was operated with WCOME and tested for its characteristics. In the third phase of the work, the test engine was modified to operate in the LHR mode so the engine components such as cylinder head, valves, and piston crown were initially machined to 300 microns for the required coating thickness to maintain the compression ratio and then the components were firstly coated with 100 microns bond- coat of Nickel, Chromium, and aluminum alloys (NiCrAl) and on the top of it 200 microns of lower thermal conductivity ceramic material Yttrium Stabilized Zirconia (8%YSZ) coated with help of plasma spray coating techniques. Then the LHR engine was fuelled with WCOME and tested for its characteristics in the fourth phase. Finally, WCOME was blended with 50 ppm of iron oxide nanofluids (WCOMEN) with help of Ultrasonicator model Leela Sonic-UPP250 with a frequency of 20 kHz and investigated for its characteristics in LHR engine and results were compared. From the experimental results, it comes to know that, the inclusion of the iron oxide nanofluids has significantly improved the stability as well as the viscosity of the WCOME. This has been reflected in the engine's characteristics operated with coated WCOMEN. The brake thermal efficiency (BTE) of the LHR engine operated with WCOMEN was found to be 12.4% higher than the uncoated WCOME. Also very attractively on the emission side, the hydrocarbon (HC), carbon monoxide(CO) and smoke emissions were reduced minimum to 30%, 15%, and 40% with WCOMEN in the LHR mode. This improvement could be due to the combination of thermal barrier coating and the presence of iron oxide nanoparticles which ensures complete combustion of injected WCOMEN. However, with LHR mode the oxide of nitrogen (NOx) was increased by 22.5% with WCOMEN and 28.3% over WCOME compare with uncoated WCOME. From the experimental results, the diesel engine operated with WCOMEN in LHR mode has shown better performance and emission characteristics with a penalty on increase in oxides of nitrogen emission. Hence, this study suggest that, iron oxide nanofluids were one of the less toxic, which decreases the safety aspects and adding nano additives in liquid form into the WCOME prevents the sedimentation issue and enhance the properties of WCOMEN with improved engine’s characteristics.