The most harmful effect of our present day civilization is Global Warming and Environmental Pollution. Diesel, being a fossil fuel is estimated to get over by the year 2050. Acceptable changes in the vegetable oils properties have resulted in efficient results and allowed us to replace diesel. The present work involves the following parameters and their levels. The diesel engine was tested on Brake power 1.1, 2.2, 3.3, 4.4kW. Whereas, injection pressure is varied from 180 to 240 bars at an interval of 20 bars with 10, 20, 25 and 30% blends of biodiesel (lemon grass oil). Very small quantity of nano catalytic substance (CeO2, MgO and ZnO) are used by the proportions of 15, 30, 45 and 60ppm to enhance the combustion properties of bio-fuel. DDSA is added with biofuel to give the stable suspension of nanocatalysts. In This investigation Taguchi method in combination with grey relational analysis(GRA) has been applied for find the predicted values. The results are predicted by parametric optimization techniques and then it is verified with confirmatory experiments. These confirmation results shows a good agreement of predicted values for three different Nano catalyst.