The present study investigated the effects of biodiesel blending under a wide range of intake oxygen concentration levels in a diesel engine. This study attempted to identify the lowest biodiesel blending rate that achieves acceptable levels of nitric oxides (NOx), soot, and coefficient of variation in the indicated mean effective pressure (COVIMEP). Biodiesel blending was to be minimized in order to reduce the fuel penalty associated with the biodiesels lower caloric value (LCV). Engine experiments were performed in a 1 l single-cylinder diesel engine at an engine speed of 1400 rev/min under a medium load condition. The blend rate and intake oxygen concentration were varied independently of each other at a constant intake pressure of 200 kPa. The biodiesel blend rate varied from 0% (B000) to 100% biodiesel (B100) at a 20% increment. The intake oxygen level was adjusted from 8% to 19% by volume (vol. %) in order to embrace both conventional and low-temperature combustion (LTC) operations. A fixed injection duration of 788 ms at a fuel rail pressure of 160 MPa exhibited a gross indicated mean effective pressure (IMEP) between 750 kPa and 910 kPa, depending on the intake oxygen concentration. The experimental results indicated that the intake oxygen level had to be below 10 vol. % to achieve the indicated specific NOx (ISNOx) below 0.2 g/kW h with the B000 fuel. However, a substantial soot increase was exhibited at such a low intake oxygen level. Biodiesel blending reduced NOx until the blending rate reached 60% with reduced in-cylinder temperature due to lower total energy release. As a result, 60% biodiesel-blended diesel (B060) achieved NOx, soot, and COVIMEP of 0.2 g/kW h, 0.37 filter smoke number (FSN), and 0.5, respectively, at an intake oxygen concentration of 14 vol. %. The corresponding indicated thermal efficiency was 43.2%.