<p>In recent decades, researchers have increasingly explored alternative fuels to improve emission characteristics without compromising diesel engine performance. Among these, water-in-diesel emulsion (W/D) has gained attention due to its potential to reduce emissions, while enhancing engine efficiency. This review critically examines the effectiveness of W/D emulsions in diesel engines, focusing on their impact on both emission reduction and performance characteristics. Various factors crucial to the commercial viability of W/D are assessed, including stability, viscosity, density, and calorific value. While W/D emulsions generally enhance brake thermal efficiency (BTE) and combustion efficiency, some studies report an increase in brake-specific fuel consumption (BSFC) due to the lower calorific value of the emulsion. Additionally, the use of W/D consistently leads to reductions in nitrogen oxides (NO_x), and particulate matter (PM). However, reported findings vary due to differences in experimental conditions, water content, surfactant types, and emulsion stability. The phenomenon of micro-explosion, which improves atomization and combustion, is also discussed as a key factor influencing W/D performance. This review highlights the need for further research to address inconsistencies in reported results, particularly in optimizing surfactant selection for stability and performance. Future studies should also focus on long-term engine durability, real-world engine testing, and economic feasibility assessments to ensure the commercial adoption of W/D emulsions in diesel engines.</p>