Abstract: In order to improve the stability, effective thermal efficiency, and emission characteristics of a diesel engine fueled with ethanol-diesel blend fuel, this paper presented an experimental scheme and experimental procedures for the stability test of ethanol-diesel based on the DoE (design of experiment). The samples of ethanol-diesel were placed in the constant temperature test chamber. The temperature data was recorded when its phase separation occurred. A response surface model based on test data was constructed using the software Design-Expert and the software Isight. Resorting to the constructed model, the influence curves of alcohol, co-solvent to phase separation temperature was obtained and optimize preparation parameters of ethanol-diesel was optimized. The optimum proportion of ethanol-diesel was confirmed as the following: ethanol 10%, co-solvent 4%, and diesel 85%, and it could stay stable without phase separation in a plug tube at room temperature for 60 days. The load characteristic tests were carried out on diesel engine separately using the optimized ethanol-diesel and pure diesel. A comparative study of the engine rotate speed of 1 500 r/min and 1 200 r/min, the effective thermal efficiency, NOx and the smoke intensity were analyzed. From the result of the tests, the engine effective thermal efficiency of optimized ethanol-diesel was higher than pure diesel under middle and high load, but was similar to the low load. NOx emission of optimized Ethanol-diesel was reduced effectively under low load, and was slightly higher under middle and high load than that of pure diesel. In the full load condition, the NOx emission of both fuels was similar. Engine smoke intensity of optimized ethanol-diesel was similar in the low load conditions, but declined under middle and high load compared to that of diesel fuel. Furthermore, the variation of the effective thermal efficiency, NOx and the smoke intensity were studied by changing the fuel supply advance angle (19°, 20.5°, 23.5°and 25°). The results demonstrated that appropriately reducing the fuel supply advance angle would improve the fuel consumption and reduce the exhaust emission of ethanol-diesel.