This study explores the performance and emission characteristics of a diesel engine fuel with biodiesel blends derived from goat fat oil, enhanced with diethyl ether (DEE) additives. Biodiesel, obtained via the transesterification of goat fat oil, serves as a renewable and sustainable alternative to conventional diesel. Blends comprising 10% (B10), 20% (B20), and 30% (B30) biodiesel, mixed with 85%, 75%, and 65% diesel, respectively, along with a fixed 5% DEE, were tested in a single-cylinder diesel engine under varying load conditions. DEE, an oxygenated additive, demonstrated its potential to enhance combustion efficiency and reduce emissions, making it a cleaner energy alternative. Key performance parameters, such as brake thermal efficiency (BTE) and brake-specific fuel consumption (BSFC), alongside emissions metrics including particulate matter (PM), nitrogen oxides (NOₓ), hydrocarbons (HC), and carbon monoxide (CO), were systematically analysed. The engine tests revealed that the inclusion of DEE significantly improved BTE, with a peak efficiency of 32.65% observed for the B10 DEE5 D85 blend. This improvement is primarily attributed to DEE’s oxygen-rich composition, which facilitates more complete combustion. However, BSFC exhibited a slight increase due to the inherently lower energy density of biodiesel and DEE compared to pure diesel. In terms of emissions, NOₓ levels were significantly reduced, with reductions of 19.19%, 21.1%, and 25.1% recorded for the B30, B20, and B10 blends, respectively, compared to conventional diesel. Despite these improvements, HC and CO emissions exhibited a slight increase across all biodiesel blends. This study provides valuable insights into the potential of biodiesel-DEE blends as a sustainable and cleaner alternative to traditional diesel fuels, while also highlighting the trade-offs associated with their use in diesel engines.