Butyl levulinate (BL) is one of the promising chemicals for biofuel generation especially as an additive for fuel-blending. The BL can be used as a chemical additive for biodiesel-diesel blend in diesel engine. The physical properties (i.e., density, viscosity, and calorific value) and emission characteristics of palm-oil derived biodiesel-diesel blends (fuel blends) (i.e., B7, B10, B15, and B20) with and without the addition of BL were determined in this work. The analysis of gas emission from the combustion of biodiesel-diesel blends in diesel engine was conducted using gas analyser. The effect of varying the volume percentage of BL at 1 %, 3 %, 5 %, and 7 % in the fuel blend was studied in this work using B15 biodiesel-diesel blend as the selected sample. Blended fuel with addition of BL was shown to have improved the fuel blend viscosity while maintaining the density within the optimum range. The calorific value of the fuel blend showed a small reduction with an increase in the percentage of biodiesel in the fuel blend. This indicated that the combustion performance and the energy produced from the varying percentage of biodiesel in the biodiesel-diesel blends would not vary significantly. Therefore, the effect of adding BL on this property was not further investigated. The concentrations of nitrogen oxide (NOx) and carbon monoxide (CO) in the gas emission from the biodiesel-diesel blends showed only a slight increase as the percentage of biodiesel in the blend increased. With the addition of the BL additive, these concentrations showed some levels of reduction. In summary, the presence of BL in the palm oil biodiesel-diesel fuel was demonstrated to have reduced the viscosity of the blend by 4.4 to 6.9 %, and reduced the concentrations of CO and NOx by 19.26 % and 12.22 % during the engine combustion.