The search for alternative fuels is driven by increasing environmental and health concerns across the globe. Water-in-diesel emulsions (WiDEs) have been explored over the years as a potential fuel for diesel engines to mitigate emissions of greenhouse gases, especially nitrogen oxides and smoke. Researchers have been developing and testing different formulations of emulsified fuels with the common goal of stabilizing the mixture and minimizing pollutant emissions without significantly compromising engine performance. In this work, a novel approach is taken by developing a hydrophilic emulsion formulation optimized for engine operating temperatures, overcoming the storage-related stability issues that most studies focus on. Two different mixtures of WiDE were heated and supplied to a Hatz 1B40 single-cylinder diesel engine. The engine was coupled to an eddy current dynamometer to measure speed, torque, and power values. Emissions of carbon monoxide (CO), carbon dioxide (CO₂), hydrocarbons (HCs), nitric oxide (NO), and oxygen (O₂) were measured by an AVL DiGas 1000 exhaust gas analyzer. Smoke emissions were measured by an AVL DiSmoke 480. This study represents a contribution to the field of alternative fuels for diesel engines by providing experimental evidence that formulating WiDE for operating temperatures can be advantageous and significantly improve thermal efficiency and reduce emissions of NO and smoke at specific engine operating conditions, with a maximum reduction of 46.86% for NO emissions and a maximum reduction of 83.67% for smoke emissions obtained when compared to diesel.