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This study presents extraction of oil by mechanical expeller and solvent extraction technique from jatropha and karanja seeds. Physico-chemical properties of extracted oil, jatropha oil methyl ester (JOME) and karanja oil methyl ester (KOME) were tested for their suitability in diesel engine. Mechanical extraction efficiency with expeller developed by IIT Delhi was found to be better (jatropha, 87%; karanja, 86%) as compared to traditional expeller (67-69%). Induction periods (oxidation stability) at 110 C were found to be: JOME, 1.76; and KOME, 2.24 h. Calorific value of JOME (38.65 MJ/kg) and KOME (40.75 MJ/kg) was comparatively lower to base diesel (44.50 MJ/kg). Comparative performance (brake thermal efficiency, brake specific fuel consumption) and emission (CO, THC, NOx and smoke opacity) characteristics were tested in 4.4 kW, single cylinder, compression ignition engine with constant speed (1500 rpm).