The present work aims to ensure the possibility of using Used Temple Oil biodiesel obtained from the temple waste as a supplementary alternative fuel for diesel in compression ignition engine. In this study, biodiesel is obtained from the waste temple oil by acid and base-catalyzed transesterification process with methanol, sulphuric acid and potassium hydroxide as a catalyst. The experimental work is carried out in a CI engine using waste/used temple oil B20UTOME biodiesel blend and B20UTOME blend with a combination of 75ppm of Aluminum oxide nanoparticles with and without EGR are investigated by comparing them with pure diesel. The experiment results reveal that the combustion and performance characteristics improved for B20UTOME blend with and without EGR and also there was further increment in performance and combustion characteristics of CI engine with the addition of aluminum nanoparticle to a B20UTOME biodiesel blend. Considerable reductions in carbon monoxide, unburnt hydrocarbons but slightly increment in oxides of nitrogen. Furthermore reduction in CO and UBHC emissions when addition of nanoparticle additive to B20UTOME blend and decrement in the NOX emission.