In recent decades, rising greenhouse gas emissions have become a major challenge and concern. Environmental pollution is one of the greatest human challenges of the 21st century. Improving the performance of internal combustion engines and reducing the amount of pollutant emissions has always been a concern for researchers. The use of alternative fuels and the control and adjustment of the lambda coefficient are known as the most effective ways to increase fuel efficiency, reduce pollution and improve engine mobility. Therefore, in this study, the relationship between air-to-fuel equilibrium ratio or lambda coefficient with engine performance and exhaust emissions of a diesel engine using diesel-ethanol fuel blends as an alternative fuel at 1700, 1800 and 1900 rpm engine speeds has been investigated. The results showed that increasing the percentage of ethanol in the diesel-ethanol fuel blend increased the lambda coefficient. This increase reduced engine power and torque. The highest power reduction was achieved at 1900 rpm at the rate of 1.18 kW and the maximum torque reduction at 1800 rpm at the rate of 5.94 N.m. As the lambda coefficient increased, the exhaust oxygen output increased by 42.89% at 1700 rpm. The increase in lambda also reduced the emissions of unburned hydrocarbons and carbon monoxide. Thus, the highest reduction of these pollutants was 23.8% at 1800 rpm and 38.75% at 1900 rpm, respectively. Also, increasing the lambda coefficient slightly increased the nitrogen oxides. Finally, due to the use of diesel-ethanol fuel blends and as a result of increasing the lambda coefficient, a significant reduction in the amount of emissions of exhaust gases was achieved.