Oxygenated diesel blend components or alternate oxygenated fuels can be either synthesized oxygenating agents of high cetane number such as ethers, glycol ethers, alcohol, methylal and carbonates or biomass products such as esters of vegetable oils. An earlier initiation of combustion and consequently an increase of cylinder pressure were observed with oxygenated diesel blends or alternate oxygenated fuels that can be attributed to the increase of cetane number as well as to the presence of fuel borne oxygen. At the same time an increase of brake specific fuel consumption is recognized with some oxygenated diesel blends having higher percentage of blend component and alternate oxygenated fuels due to the decrease of their fuel calorific value. Therefore universal oxygenate correction factor formulated earlier for the combustion heat release simulation of oxygenate blended diesel in CIDI engine should be used considering the heat input instead of fuel input if the variation in the fuel heating value is appreciably large. The universal oxygenate correction factor is found effective in the prediction of combustion heat release of oxygenated (Diglyme) diesel blends as well as alternate oxygenated fuel (DME) in CIDI engine. Any improvement predicted in the combustion of the engine fuel under identical heat input and operating condition will enhance the performance and reduce the emission simultaneously. Comparison of performance of CIDI engine fuelled with pure diesel, oxygenated diesel blends and alternate oxygenated fuels under identical heat inputs and operating conditions by computer simulation could effectively identify the performance improving oxygenates to use as neat fuels or blend components. The possible oxygenates for blending or alternate oxygenated fuels can be selected from the computer simulation because the possible reduction in the emission is always high when there is a comparative increase in the performance under identical condition.