The ambient air around us is continuously and increasingly loaded and polluted through emission that comes from different sectors, especially from the transportation sector. This fact is due to the growing energy consumption in the transport sector which is forecasted worldwide in the nearer and far future. Bio-based energy may be consumed in an increasing way in the sector until 2050. Methanol, and if it is produced on bio-basis, called bio-methanol, is the simplest alcohol. Methanol costs less than other automotive alternative alcohols, for example, ethanol or butanol, so it may be among the cheapest technical alcohols. As for methanol’s structure, it contains 30% more inherent oxygen on a molecular base than fossil diesel. The aim of this research is to give comprehensive overview about the methanol’s effect on the combustion and emission properties of a diesel engine. During the analyses of combustion and emission characteristics the most relevant parameters have been included. The study also contains calculations regarding theoretical combustion (oxidation process) of the different hydrogen-carbons. A rarely investigated parameter, O2 consumption or demand is also in focus, besides CO2 emission and intensity throughout the calculations. For our experimental test series, diesel fuel was the base fuel and it has been mixed with biodiesel first, and this mixture has been further blended with methanol. Methanol’s theoretical contribution to the diesel–biodiesel blend’s O2 consumption and CO2 emission is a small amount. Engine’s external parameters have not changed significantly if it is running on blend with methanol. Methanol has rather affected the combustion and emission properties of the engine more significantly.