The present study investigates the effect of air-side oxygen concentration enrichment on the performance and emission of a single cylinder diesel engine using a bio-fuel blend as fuel. In this study, a natural phenolic compound, namely, cardanol is selected as the bio-fuel, which is obtained from the shell of cashew nut after purification. A blend of B10M10 (10% cardanol +10% methanol + 80% diesel by volume) is prepared and tested in the engine at various loading conditions. The experiments are carried out at atmospheric oxygen condition and an increment of 3, 5, and 7% of atmospheric oxygen concentration by weight. There is a drastic reduction in HC, CO, and smoke except for NOx emission. The level of NOx emission increases as the oxygen concentration in the intake air is increased. The performance characteristic will increase as the oxygen concentration increases, and higher brake thermal efficiency is obtained for B10M10 at 7% oxygen concentration. B10M10 with 7% oxygen enrichment gives better results, similar to diesel, except for NOx emission.