Oxy-hydrogen gas obtained from electrolysis process has a properties almost equivalent to hydrogen and is sued to improve performance and emission characteristics of engine at fixed compression ratio (CR) and injection advance (INJA). This chapter presents effect of oxy-hydrogen on performance and emission characteristics of engine studied between CR range of 15:1 to 18:1 and INJA range of 20 degree before top dead center (DBTDC) to 26 DBTDC to identify best suited CR and INJA for oxy-hydrogen and diesel blending. Flow rate of oxy-hydrogen gas and load on engine is also varied from 100 ml/min to 200 ml/min and no load to full load. Brake power (BP), brake thermal efficiency (BTE), brake specific fuel consumption (BSFC) are the recorded performance parameters and unburnt hydrocarbon (HC), carbon di-oxide (CO2) and oxides of nitrogen (NOx) are the recorded emission parameter. Load is observed to be most significant factor and hence emission measurement is carried out at full load condition. At injection advance of close to 20:1 DBTDC, CR of 18:1 and oxy-hydrogen diesel blend wherein oxy-hydrogen is flowing at the rate of 150 ml/min under full load, engine produces best performance and emission results.