Although pure biodiesel is used in diesel engines, some challenges, such as higher density, lower cetane number, and lower calorific value, prevent it from completely replacing conventional fossil diesel. Therefore, the addition of compounds aimed at improving the biodiesel combustion process or improving its physicochemical properties is a fundamental issue in using them in pure form or in high proportions in engines, thereby maintaining the performance of such equipment. An alternative that has been studied in recent years is the addition of nanoparticles to biodiesel, which act as catalysts in the combustion process. This study examined in detail the influence of nanoadditives on the performance, combustion, and emissions characteristics of the CI engine. Furthermore, it will discuss the challenges and potential future directions in the utilization of nanoparticles to improve the use of biodiesel in CI engines. The reviewed articles show that the addition of nanoparticles to biodiesel can improve the thermal efficiency of the engine, reduce fuel consumption, carbon monoxide, unburned hydrocarbons, and nitrogen oxides (NOX) emissions due to the catalytic effect of metallic oxide nanoparticles. As a result, the activation temperature of carbon combustion is reduced and, therefore, the oxidation rate of hydrocarbons is increased, promoting more complete combustion. Thus, the use of nanoparticle catalysts can be considered a promising method to optimize the performance of compression ignition engines operating on biodiesel.