In this work the effect of the structure of water-in-diesel fuel emulsion (WFE) on a three cylinder diesel engine performance has been investigated. Based on membrane emulsification, two different membranes of pore sizes of 0.2 μm and 0.45 μm has been individually used to change the emulsion structure while keeping the same WFE volumetric content (at 17% water volumetric content and 0.5% mixing emulsifier content). The Results showed that emulsions with large size of water droplets resulted in greater reduction in NOx emissions up to 25%. While, emulsions with finer droplets not only gave reductions in engine smoke and unburned hydrocarbons of values greater than 80% and 35% respectively, but also resulted in an increase of the engine effective efficiency up to 20%.