The global automotive and logistics sectors currently face an escalating environmental crisis driven by the prolific discharge of particulate matter and greenhouse gases from conventional diesel-powered internal combustion engines. While the industry has pivoted toward renewable alternatives such as biodiesel and bioethanol, these oxygenated fuels often present inherent limitations regarding oxidative stability, lower energy density, and phase separation when utilized in ternary blends. To address these physicochemical deficiencies, this study investigates the synthesis and application of a novel ternary blend consisting of conventional diesel, biodiesel, and bioethanol (70:20:10) (DBE), augmented with coconut shell-derived nanobiochar (CNS) as a high-surface-area heterogeneous catalyst. The research specifically explores the impact of varying CNS nanobiochar concentrations—0, 20, 30, and 40 ppm—on the holistic fuel profile to determine an optimal formulation for modern compression ignition systems. The experimental methodology involved a rigorous series of laboratory analyses conducted in strict accordance with ASTM standards, including ASTM D445 for kinematic viscosity and ASTM D93 for flash point. Critical physicochemical parameters, including density, fire point, corrosiveness, and calorific value, were evaluated using specialized analytical instrumentation. The results revealed that while density and corrosiveness remained relatively stable across the various dosages, viscosity and thermal stability metrics exhibited significant sensitivity to nanobiochar loading. Notably, the 20 ppm CNS concentration emerged as the most effective variant, demonstrating the lowest kinematic viscosity at 5.6 mm2/s and superior safety characteristics with a flash point of 58°C, alongside a calorific value of 29.18 MJ/kg. In engine performance evaluations, the 20 ppm DBE-CNS blend significantly enhanced Brake Thermal Efficiency (BTE) and optimized Specific Fuel Consumption (SFC) compared to the unblended diesel baseline. The catalytic effect of the nanobiochar facilitated a micro-explosion phenomenon during combustion, leading to cleaner burning and a measurable reduction in hazardous pollutants, including carbon monoxide (CO), nitrogen oxides (NOx), and carbon dioxide (CO2). The study concludes that micro-dosages of coconut shell nanobiochar serve as a viable mechanism for upgrading renewable fuel blends, though further research is recommended to explore long-term effects on fuel injector durability and tribological wear.