The gasification technology is now considered to be in an advanced stage of development. Hence there is huge expectation from the user industry for its application. Gasification is a process that converts carbonaceous materials, such as coal, petroleum, or biomass, into carbon monoxide and hydrogen by reacting the raw material at high temperatures with a controlled amount of oxygen. The resulting gas mixture is called synthesis gas or syngas and is itself a fuel. Gasification is a very efficient method for extracting energy from many different types of organic materials, and also has applications as a clean waste disposal technique. The biomass gasifier, using wood chips as fuel, has a dry producer gas consisting of H-2 (up to 45 vol%), CO (up to 30 vol%), CO2 (up to 20 vol%), CH4 (8-12 vol%) and N-2 (1-2 vol%). This gas composition makes the producer gas highly suitable as fuel for Solid Oxide Fuel Cell (SOFC). However, the gas has a relatively high particle loading (up to 60 g/Nm(3))and a tar content of up to 2 g/Nm(3). In addition, it has been reported that the dry producer gas contains 100-200 PPmv H2S and 500-1000 ppmv NH3. Due to otherwise expected diesel engine performance degradation, the particles have to be removed before entering the Biomass Gasifier-Diesel engine setup. The advantage of gasification is that using the syngas is more efficient than direct combustion of the original fuel; more of the energy contained in the fuel is extracted. Syngas may be burned directly in internal combustion engines, used to produce methanol and hydrogen, or converted via the Fischer-Tropsch process into synthetic fuel. Gasification can also begin with materials that are not otherwise useful fuels, such as biomass or organic waste. In addition, the high-temperature combustion refines out corrosive ash elements such as chloride and potassium, allowing clean gas production from otherwise problematic fuels. The objective of the present work was to estimate saving in energy by reducing the moisture content in biomass. The reduction in moisture content increases the fuel value of biomass. This work relates to the analysis and the evaluation of the performance of Biomass Gasifier-Diesel engine setup with focus on moisture content in biomass and its effects on various parameters under typical operating conditions. The aim of this paper is focused on evaluation of performance parameters for biomass gasifier-diesel engine setup using woody biomass (Subabool). For the purpose,downdraft gasifier of %KW capacity was used that was coupled to 10 hp single cylinder diesel engine