Increasing of costly and depleting fossil fuels are prompting researchers to use edible as well as non-edible vegetable oils as a promising alternative to petro-diesel fuels. A comprehensive computer code using ”Quick basic” language was developed for the diesel engine cycle to study the combustion and performance characteristics of a single cylinder, four stroke, direct injection diesel engine with variable compression ratio. The engine operates on diesel fuel and 20% (mass basis) of biodiesel (derived from soybean oil) blended with diesel. Combustion characteristics such as cylinder pressure, heat release fraction, heat transfer and performance characteristics such as brake power; and brake specific fuel consumption (BSFC) were analyzed. On the basis of the first law of thermodynamics the properties at each degree crank angle was calculated. Wiebe function is used to calculate the instantaneous heat release rate. The computed results are validated through the results obtained in the simulation Diesel-rk software.