Fuel and fluid characteristics
Main article: Diesel fuel
Diesel engines can operate on a variety of different fuels, depending on configuration, though the eponymous diesel fuel derived from crude oil is most common. The engines can work with the full spectrum of crude oil distillates, from natural gas, alcohols, petrol, wood gas to the fuel oils from diesel oil to residual fuels. Many automotive diesel engines would run on 100% biodiesel without any modifications. This would be such a potential advantage since biodiesel can be made so much more cheaply than it takes to have traditional diesel fuel from a fuel station's pump.

The type of fuel used is selected to meet a combination of service requirements, and fuel costs. Good-quality diesel fuel can be synthesised from vegetable oil and alcohol. Diesel fuel can be made from coal or other carbon base using the Fischer–Tropsch process. Biodiesel is growing in popularity since it can frequently be used in unmodified engines, though production remains limited. Recently, biodiesel from coconut, which can produce a very promising coco methyl ester (CME), has characteristics which enhance lubricity and combustion giving a regular diesel engine without any modification more power, less particulate matter or black smoke, and smoother engine performance. The Philippines pioneers in the research on Coconut based CME with the help of German and American scientists. Petroleum-derived diesel is often called petrodiesel if there is need to distinguish the source of the fuel.