Design and operating parameters of diesel engine were optimized in the present work with respect to performance, combustion and emission parameters. The goal is to reduce brake specific fuel consumption (BSFC), exhaust gas temperature (EGT), ignition delay (ID), emissions (CO, NOx, HC) and to increase peak pressure (PP), brake thermal efficiency (BTHE), heat release (HR) simultaneously with least number of experimental runs. The objective was accomplished through experimental investigations, design of experiments, Taguchi method and Grey Relational Analysis. Four parameters viz. injection timing (IJT), injection pressure (IP), compression ratio (CR) and load were varied at four levels and the (nine) responses were recorded. Taguchi approach was applied to individual response and observed that optimal factor settings for various responses are different.