Usage of biodiesel produced with conventional transesterification methods decreases the conversion of biodiesel from vegetable oil. Microwave-assisted production enables higher reaction efficiency, providing better conversion of vegetable oils. It also causes to obtain poorer characteristics of biodiesel, such as higher viscosity and density. It was aimed to improving the properties of biodiesel with microwave-assisted production and mixing it with nanoparticles to investigate the performance, combustion and emission characteristics. The influences of nanoparticle addition (carbon quantum dot) on engine performance, combustion and emissions have been analyzed in a direct injection CI engine. A single cylinder water cooled CI engine was used in the experiments. Experiments were performed at 4.12, 9.61, 15.10, 20.60 Nm and 2200 rpm. Canola biodiesel was obtained via the microwave-assisted transesterification method and mixed with diesel at the ratio of 20% (B20). 50, 100 and 150 ppm nanoparticle were added to the obtained B20 and tested in a CI engine. Specific Fuel Consumption (SFC) raised by 2.03%, 4.83%, 4.40% and 1.69% with B20, B20CQD 50 ppm, B20CQD 100 ppm and B20CQD 150 ppm respectively compared that diesel at 15.10 Nm. Remarkable reduction was found on CO, HC with B20CQD 50 ppm, B20CQD 100 ppm and B20CQD 150 ppm according to B20. In addition, an impressive reduction was realized on soot emissions with the usage of nanoprticle addition. But, NOx increased using fuel blends. As a result, the usage of quantum dot nanoparticle improved the poor properties of canola oil biodiesel and test fuels were used easily without modification in a diesel engine.