Biodiesel is a limited diesel fuel alternative that has become popular because it can be made from a wide range of non-edible feedstocks. In these engines, the spark is caused by compression. Before biodiesel can be used reliably in business, more research is needed to figure out how it affects combustion, emissions, and how well an engine works. In this study, a direct injection 4-stroke single-cylinder diesel engine with 5% and 10% exhaust gas recirculation was used to test blends of 10% (N10) and 20% (N20) Neem oil methyl ester (NME) (EGR). Compared to diesel, N20's brake thermal efficiency (BTE) is 7.2% higher and its brake specific energy consumption is 11.4% lower (BSEC). It was shown that these two results hold true for very heavy loads. But when EGR is used, the performance indicators of the N20 mix get worse. The results of the emission analysis showed that the levels of oxides of nitrogen (NOx) went up when biodiesel was mixed in, but that these levels went down when exhaust gas recirculation (EGR) was used, and this was true for both biodiesel blends and all loading conditions. At full load, using the N20 mix instead of diesel cuts emissions of unburned hydrocarbons (UHC), carbon monoxide (CO), and smoke by 40.6%, 31.2%, and 29.6%, respectively. Even though it's still lower than diesel operation, adding EGR raised the CO, UHC, and smoke density for both N10 and N20 mixes in all loading conditions, but it's still lower than diesel operation.