Experimental investigation is carried out under different loading conditions in a three cylinder diesel engine with its piston crown coated with Yttria Stabilized Zirconia (YSZ) to understand the influence of the thermal barrier coating (TBC) on performance and emission characteristics in comparison with baseline engine characteristics. YSZ is chosen as the candidate material for coating the piston crown because of its desirable physical properties such as high coefficient of thermal expansion, low thermal conductivity, high Poisson’s ratio, and stable phase structure at higher temperature conditions. For the measurement of emission characteristics, ISO 8178-4 “C1” 8 Mode testing cycle procedure is followed. Experimental results revealed that the heat loss to the cooling water is reduced up to 5–10% and the thermal efficiency is increased by 3–5% with reduction of brake specific fuel consumption by up to 28.29%. Experimental results also revealed that Hydro carbon (HC) emission is reduced up to 35.17%, carbon monoxide (CO) by up to 2.72% and Carbon di-oxide (CO2) emission is increased by up to 5.6%.