This study primarily aimed to investigate the effect of diesel-biodiesel-transesterified pyrolysis bio-oil (TPB) blends on performance and exhaust gas when used in diesel engines at various speeds and loads. The pyrolysis bio-oil (PBO) was obtained from fresh palm fruits using a pyrolysis process and then converted into biodiesel using first-step esterification, followed by second-step transesterification. The response surface methodology was used to investigate the optimal conditions for producing TPB from esterified pyrolysis bio-oil in the second step. The methyl ester (ME) purity of the TPB was optimized by varying three factors: methanol content (13.2-46.8 wt %), KOH loading (1.6-18.4 g/L), and reaction time (26-94 min). The experimental results revealed an ME purity of 74.35 wt % under the recommended conditions of 38.3 wt % methanol, 15.1 g/L KOH, and 62 min reaction time at 60 °C with a 300 rpm stirring speed. This study's workflows included observing phase behavior and evaluating the gas emissions and performance of the diesel-biodiesel-TPB blends in a diesel engine. The results presented that the 30 wt % diesel, 60 wt % biodiesel, and 10 wt % TPB blend (D30B60TPB10) achieved similar performance to that of the diesel in terms of performance under low-emission conditions. Compared with diesel, the D30B60TPB10 blend's brake-specific fuel consumption and brake thermal efficiency rose by 7.19% and 3.88% at maximum load and engine speed, respectively, while CO and NO emissions reduced by 8.73% and 31.37%. Furthermore, D30B60TPB10 and D30B60EPB10 blends were compared to assess the possibility of using TPB after upgrading its properties. The test results indicated that the diesel-biodiesel-TPB blends are an attractive potential alternative biofuel for agricultural engines that would benefit rural communities and farmers.