The use of biofuels and additives can limit the exhaust emission from IC engines. The current study explores the possibility of using Nitromethane (NM) as additive in 20% n-butanol-diesel blend along with application of EGR to limit exhaust smoke and NOx emissions of a diesel engine. The objectives of this study is to find out suitable ratio of NM in BU20 (20% butanol in diesel) and flow rate of EGR for improved engine performance and reduced emissions. An experimental examination was done on a vertical-single cylinder, 4- stroke, constant-speed, water cooled, DI diesel engine. Different combinations of NM-BU20 blends of range NM (1 – 3%) and EGR rate (10-30%) Have been prepared and investigations were performed according to design matrix created by design expert software. A complete comparison of various combination of fuel and EGR was done to find the most appropriate combination of NM-BU20 blend and EGR for reduced emissions with reasonable performance.