Plastic materials, while versatile, pose significant environmental challenges due to disposal and recycling issues, with millions of tons entering landfills and oceans annually. This study investigates the use of polymer-based fuels from low-density polyethylene (LDPE), high-density polyethylene (HDPE), and polypropylene (PP) pyrolysis oils in diesel engines as alternative fuels to address both plastic waste and energy production. A 3.5 kW single-cylinder compression ignition engine was used to test various fuels, optimizing four parameters—fuel type, compression ratio (CR), injection pressure (IP), and engine load—using the Taguchi method. Brake-Specific Energy Consumption (BSEC) was measured to assess engine efficiency. Results showed that engine load most significantly influenced BSEC, followed by fuel type, IP, and CR. Optimal BSEC was achieved with LDPE-PO and PP-PO under specific conditions, with prediction errors of 3.9% and 3.7%, respectively. While LDPE exceeded CO limits, PP showed better emission performance, meeting BS-VI standards. The Taguchi method successfully optimized engine performance, reducing evaluation time and improving fuel efficiency. PP was more environmentally friendly, and the model’s low error margin supports its reliability. Future research is recommended to refine this approach further.