From last two decades, research in the field of alternative, clean and renewable bio-fuels has been increased dramatically for performance improvement, emission control, and running cost reduction in internal combustion engines due to the continuous increase of fuel pricing and depletion of the available nonrenewable fuels. In the present study, mixture of diethyl ether and nitromethane is proposed as a bio-fuel to evaluate the feasibility of diesel-diethyl ether-nitromethane (D-DEE-NM) ternary blends as compared to pure diesel. For the experiments, a VCR diesel engine was used to determine the performance and emission characteristics of D-DEE-NM ternary fuel blends at different concentrations, loads, and compression ratios. In the first phase of experiments, D-DEE7.5-NM2.5 blend (diesel 90%, diethyl ether 7.5 %, nitromethane 2.5 %) was observed as best fuel at standard engine parameters. The improvement in engine performance (BTE increased 17.39% and BSFC decreased 19.44%) and emission reduction (smoke 27.94%, NO(x)23.33%, and CO 28.57%) was noticed using D-DEE7.5-NM2.5 blend as compared to pure diesel at full load condition; however, slight increment (3.57%) was found in HC emission. Further, the experiments were performed using selected blend (D-DEE7.5-NM2.5) at different compression ratios (CR), in which CR 19.5 was found best among all CRs under existing engine conditions. By increasing CR from 18.5 (standard) to 19.5, improvement in engine performance (3.70% increment in BTE and 6.89% decrement in BSFC) and emission reduction (smoke 12.24%, CO 20.00%, and HC 65.51%) were found using D-DEE7.5-NM2.5 blend; however, slightly higher level of NO(x)with tolerable increment of 6.52% was observed. D-DEE7.5-NM2.5 fuel blend was also found economic as compared to pure diesel.