From environmental sustainability, energy security, and economic stability perspectives, transitioning from diesel engines to alternative fuels is significant. Alternative fuels are crucial in creating a sustainable and secure energy landscape. In this study, a 150 μm-thick Aluminium titanate coating was applied to the piston crown and cylinder liner, and blends of 10% raw vegetable oil (Pongamia and Neem) and 90% diesel by volume were tested to determine how these blends would affect the coated engines’ characteristics. Using raw vegetable oil at up to 10% of the volume in the coated engine reduces the chemical processing required for biodiesel conversion and the associated cost. A distinguishing feature of this study is the direct incorporation of vegetable oils into diesel fuel at a 10% volumetric ratio for operation in a coated engine. Low heat rejection engines running on diesel-pongamia oil and diesel-neem oil blends of 10% by volume performed the best, with 4.9% and 3.4% higher brake thermal efficiency and 12.6% and 10.93% lower brake specific energy consumption, respectively, than uncoated engine diesel operations. Emission reductions (HC/CO/smoke) for coated engines were 33.3%/56.3%/45.7% with diesel–pongamia and 26.6%/51.5%/39.4% with diesel–neem. While the coated engine demonstrated a slight improvement in combustion behaviour, it was accompanied by an increase in NOx emissions of 25.9% and 19.3% for the diesel–pongamia and diesel–neem oil blends, respectively.