The interest in ethanol as a potential alternative to fossil fuels has gained momentum since the mid-twentieth century. Ethanol, being an oxygenated fuel, promotes more complete combustion, which reduces particulate emission from Compression Ignition Engines. The cooling effect of ethanol, due to its higher latent heat of vaporization, also reduces the emission of oxides of nitrogen. The chapter starts with a discussion on the physicochemical properties of ethanol relevant to engine application. It is followed by a description of various processes to produce ethanol, and its classification based on the feedstock used. There are four main strategies for using ethanol as a fuel in CI engines: fumigation, blending by adding cosolvents, blending by emulsification, and dual-fuel mode. The chapter addresses the technical challenges associated with blending ethanol with diesel and discusses the potential solutions. The safety aspects of using ethanol as a fuel have also been brought into the scope of discussion.