Investigations were carried out to evaluate the performance of direct injection diesel engine with medium grade low heat rejection (LHR) combustion chamber and 3 mm air gap insulated piston, 3 mm air gap insulated liner, and ceramic coated cylinder head [ceramic coating with the thickness of 500 µ was made on the inside portion of the cylinder head].The engine had different operating conditions [normal temperature and pre–heated temperature] of crude waste fried vegetable oil (WFVO) which was collected from restaurants, hotels, etc. with varied injector opening pressure and injection timing. Performance parameters and exhaust emissions were evaluated at various values of brake mean effective pressure of the engine, while combustion parameters were determined at full load operation of the engine using special pressure–crank angle software package. Comparative studies were performed between vegetable oil operation and diesel operation in the engine with both versions of the combustion chamber with varied injection timing and injector opening pressure. Conventional engine (CE) showed deteriorated performance, while the engine with medium grade LHR combustion chamber had improved performance with waste fried vegetable oil operation at the recommended injection timing and pressure. Performance of both versions of the combustion chamber improved with advanced injection timing and at higher injector opening pressure compared with CE with pure diesel operation. The optimum injection timing was 32o bTDC (before top dead centre) with conventional engine, while it was 30o bTDC for the engine with LHR combustion chamber and vegetable oil operation. Compared with pure diesel operation in the conventional engine, at manufacturer's recommended injection timing of 27o bTDC, peak brake thermal efficiency increased by 9% at full load operation, brake specific energy consumption decreased by 2%, volumetric efficiency decreased by 13%, smoke levels decreased by 10%, and nitrogen oxide (NOx) levels increased by 44% with waste fried vegetable oil operation in the engine with LHR combustion chamber.