The performance of a Diesel cycle with heat transfer loss and variable specific heat ratio of working fluid is analysed. Using finite time thermodynamics, the characteristic curves of the work output v. compression ratio, the thermal efficiency v. compression ratio and the work output v. thermal efficiency are obtained. Moreover, the effects of variable specific heat ratio of working fluid on the cycle performance are significant. The results obtained in this work can help to understand how the cycle performance is influenced by the variation specific heat ratio, and they should be considered in practical cycle analysis.