Diesel engines have been used widely as a promising prime mover in the field of stationary and locomotive energy applications. However they are major contributors of harmful emissions such as hydrocarbons, CO, CO2, oxides of nitrogen and fine particulate matter. Hence air pollution due to harmful exhaust gases from the diesel engines is a serious issue to be addressed. These emissions can be reduced to an extent by using metals, metal oxides and ceramics, especially in nano sized form, as fuel additive. Among various metal oxides, cerium oxide is an excellent fuel additive which can reduce both HC and NOx emissions simultaneously, due to its variable electronic structure and high oxygen storage capacity.