In the pursuit of sustainable and circular energy sources, this study examines the potential of tire pyrolysis oil (TPO) as a diesel fuel substitute when combined with hydrotreated vegetable oil (HVO), a second-generation biofuel. At varying TPO-HVO blend percentages, this investigation evaluates engine performance and emissions in relation to critical fuel parameters, including density, viscosity, and lubricity. The high-frequency reciprocating rig (HFRR) method was employed to examine tribological aspects, and a single-cylinder diesel engine was tested under various load conditions. The findings indicated that blends containing up to 30% TPO maintained sufficient lubrication and engine performance to comply with diesel standards, concurrently reducing carbon monoxide and smoke emissions. The increase in TPO proportion resulted in a decrease in cetane number, an increase in NOx emissions, and a rise in viscosity, particularly under full engine load conditions. The utilization of TPO is crucial for converting tire waste into fuel, as it mitigates the accumulation of tire waste and reduces dependence on fossil fuels, despite existing challenges. This study provides critical insights into the efficacy of blending methods and underscores the necessity of additional fuel refining processes, such as cetane enhancement and desulfurization, to facilitate their integration into transportation energy systems.