In recent years, environmental problems and energy shortages have prompted the search for new alternative fuels to diesel engines. Biodiesel is recognized as one of the most promising alternative fuels, with the advantages of being renewable, environmentally friendly and biodegradable. However, some properties of biodiesel, such as lower calorific value and higher viscosity may lead to a long ignition delay, high fuel consumption and increased NOx emission. To optimize the properties of biodiesel and make it suitable for internal combustion engines (ICEs), the fuel modification technology has emerged in recent years, among which the nano-fuel technology has gained considerable development. Nanoparticles have many superior properties, such as high specific surface area, better heat transfer capability and high catalytic properties, which can facilitate combustion and reduce emissions for ICEs. Therefore, it is particularly important to make it clear that the impact of nanoparticles in biodiesel and its blends. This study aims to review the effect of nanoparticles on diesel engines driven by bio-diesel and its blends. The article begins with a review of the preparation of nanoparticle-blended biodiesel fuels and the fuel stability studies are also summarized. Then, the article discusses the effects of nanoparticles (metal and non-metal) on the improvement of engine performance and emissions, respectively. The results show that nanoparticles have a positive effect on the improvement of engine performance and emissions. Nevertheless, there are still a few issues that need to be addressed before this new fuel can be formally introduced into service.