This study is focused on analyzing of heat losses of a heavy duty turbocharged low heat rejection (LHR) diesel engine operating with ethanol-diesel fuel blend. Cylinder head, valves and pistons of the test engine were coated with yttria-stabilized zirconia by atmospheric plasma spray method. In LHR engine diesel fuel and ethanol (10% by volume)-diesel fuel blend used as fuel. The results were compared with those of standard engine fuelled with conventional diesel fuel. By using experimental data (exhaust gas temperature, inlet manifold temperature, cooling water inlet-outlet temperature, mass flow of cooling water and fuel) the heat losses of the test engine calculated according to first law of thermodynamics. After the thermal analysis it was determined that fuel combustion energy increased to 34.10%, exhaust gas enthalpy decreased to 11.9%, inlet air enthalpy of LHR Ethanol increased to 13.5%, heat losses to water decreased to 6.3%, convection and radiation loss increased to 532%, for LHR Ethanol condition. For LHR Diesel, fuel combustion energy decreased to 10%, exhaust gas enthalpy decreased to 20.2%, inlet air enthalpy increased to 1.9%, heat losses to water decreased to 16.2%, convection and radiation loss increased to 136%.