This work is focused to improve the engine operation along with reducing the emission in diesel engine, operated using optimal distilled waste plastic oil blend (D1WPO30). Here, the exhaust gas was recirculated to the engine during run under standard and retarded injection timings about 23 degrees and 17 degrees bTDC. The percentages of exhaust gas recirculation (EGR) were 10 vol% and 20 vol%. In both cases, the engine was operated using diesel and distilled waste plastic oil blends with an optimized ratio of 30 vol%. The engine performance, combustion, and exhaust parameters were analyzed and compared with normal operations, and the brake thermal efficiency (BTE) of the engine was found higher about 10% with retarded and EGR operation than a normal operation with 23 degrees bTDC. The specific fuel consumption was found increased by about 5% than normal operations due to the re-burning of unburned hydrocarbon. Both cylinder pressure and heat release rate were found to decrease with an increase in EGR rates, which was mainly due to reduced cylinder temperature. The NOx and other emission parameters like carbon monoxide and unburned hydrocarbon were found a decrease from 8 to 16% due to the combined effect of retarded and EGR operation than standard D1WPO30 operations. The NOx was reduced upto 5% with EGR operations due to lower cylinder temperature caused by the increased heat capacity of the working mixture.