Light Vegetable oils are a promising alternative among the different diesel fuel alternatives. Using Light Vegetable oils in diesel engine is not a new idea. The Vegetable oils have high energy content. However, the high viscosity, poor volatility and cold flow characteristics of vegetable oils can cause some problems such as severe engine deposits, piston ring sticking and thickening of lubrication oil due to long-term use in diesel engines. Diesel fueled engine have the disadvantage of producing Smoke, Particulate Matter and Nitrogen Oxides and are now subjected to increasingly severe legislation of Emission norms. The required levels are difficult to achieve through engine design alone. Even with high-grade fuels, catalytic systems are being extensively investigated to reduce the diesel engine emission. But there are still difficulties in operation of these. This leads to replacement of diesel fuel with renewable fuels has been set target worldwide to reduce the diesel exhaust pollution. The energy of the light vegetable oil can be released more efficiently with the concept of low heat rejection (LHR) engine. The aim of the study is to apply LHR engine for improving the engine performance and reducing the emission when light vegetable oil (turpentine oil) is used as an alternate fuel. The work was carried out in two stages. In first Stage, the turpentine oil (20, 40, 60, 80 & 100, v/v) with diesel blends used in direct injection diesel engine and to identify best blend with respect to performance and emission. In second Stage, the work has been carried out by the converting direct injection diesel engine in to a LHR engine and the effects of different blends of turpentine oil (20, 40, 60, 80 & 100, v/v) with diesel fuel used in LHR engine and its performance, emission and combustion characteristics have been investigated experimentally. From the experimental investigation, the combination of LHR engine with blended fuels shows the better performance when compared to diesel engine. The smoke density decreases for the diesel engine (without LHR) whereas with the effect of LHR, Oxides of Nitrogen will be reduced and heat release rate also reduces.