The effects of water content of three-phase emulsions and engine speed on the combustion and emission characteristics of diesel engines were investigated in this study. The results show that a larger water content of water-in oil (W/O) and oil-in-water-in-oil (O/W/O) emulsion caused a higher brake specific fuel consumption (bsfc) value and a lower O2, as well as a lower NOx emission, but a larger CO emission. The increase in engine speed resulted in an increase of bsfc, exhaust gas temperature, fuel-to-air ratio, CO2 emission and a decrease of NOx, CO emission, and smoke opacity. Because of the physical structural differences, the three-phase O/W/O emulsions were observed to produce a higher exhaust gas temperature, a higher emulsion viscosity and a lower CO emission, in comparison with that of the two-phase W/O emulsion. In addition, the use of W/O emulsions with water content larger than 20% may cause diesel engines to shut down earlier than those running on O/W/O emulsions with the same water content. Hence, it is suggested that the emulsions with water content larger than 20% are not suitable for use as alternative fuel for diesel engines.