The need to decrease the consumption of materials and energy and to promote the use of renewable resources, such as biofuels, stress the importance of evaluating the performance of engines based on the second law of thermodynamics. This paper suggests the use of exergy analysis (as an environmental assessment tool to account wastes and determine the exergy efficiency) combined with gas emissions analysis to optimize the performance of a compression ignition (CI) engine using biofuels such as cottonseed and palm oils, pure or blended with diesel for different engine loads. The results show that the combination of exergy and gas emissions analyses is a very effective tool for evaluating the optimal loads that can be supplied by CI engines. Taking into account technical constraints of engines, a tradeoff zone of engine loads (60% and 70% of the maximum load) was established between the gas emissions (NO and CO2) and the exergy efficiency for optimal performance of the CI engine.