Investigations were carried out to evaluate the performance of a low heat rejection (LHR) diesel engine consisting of different versions, such as ceramic coated cylinder head engine-LHR-1-Air gap insulated piston and air gap insulated liner-LHR-2- and Ceramic coated cylinder head, air gap insulated piston and air gap insulated liner -LHR-3 with degrees of insulation with normal temperature condition of linseed oil with varied injection pressure. Performance parameters were determined at various magnitudes of brake mean effective pressure. Pollution levels of smoke and oxides of nitrogen (NOx) were recorded at the peak load operation of the engine. Combustion characteristics of the engine were measured with TDC (top dead centre) encoder, pressure transducer, console and special pressure-crank angle software package. Conventional engine (CE) showed deteriorated performance, while LHR engine showed improved performance at recommended injection timing of 27 degrees bTDC and recommend injection pressure of 190 bar with vegetable oil operation, when compared with CE with pure diesel operation. Peak brake thermal efficiency increased by 14%, smoke levels decreased by 10% and NOx levels increased by 30% with LHR engine at an injection pressure of 270 bar when compared with pure diesel operation on CE at manufacturer's recommended injection timing.