To achieve minimal carbon emissions and zero NOx emissions of a diesel combustion engine, a numerical study on novelistic Oxy-Fuel Combustion (OFC) technique (nitrogen free combustion) is carried out.  Diesel engine chemical reactions mechanism indicates that the presence of nitrogen during combustion generates NOx emissions, so a nitrogen free oxidizer environment i.e. oxy-fuel combustion is investigated, analyzed and compared with the conventional air combustion engine. A 4-stroke water cooled Kirloskar type engine with Conventional Air Combustion (CAC) is experimentally tested at various load conditions, with data acquisition done on cylinder pressure, indicated brake power (IBP), indicated mean effective pressure (IMEP) and emissions. The experimental data is used to correlate and validate the 3D Computational Fluid Dynamics (CFD) simulation setup with CAC and the validated CFD model is used to study the OFC impact on in-cylinder flow, engine performance and emissions.The results indicates that NOx emissions are completely eliminated in OFC and carbon emissions are significantly reduced. Contrastingly an average drop of 45% in IBP, IMEP of OFC is noticed at all the operating conditions, which can be attributed to lean, early start of combustion and shorter combustion rates in OFC. Water injection technique is adopted to overcome the loss in engine performance with OFC, although a relative average improvement of 32% in engine performance is observed in OFC with water injection, the overall engine performance is still 10% lower compared to the conventional air combustion.