In this paper, an experimental investigation was carried out on the combustion process of a compression ignition (CI) engine running with biodiesel blends under steady state operating conditions. The effects of biodiesel on the combustion process and engine dynamics were analysed for non-intrusive combustion diagnosis based on a four-cylinder, four-stroke, direct injection and turbocharged diesel engine. The signals of vibration, acoustic and in-cylinder pressure were measured simultaneously to find their inter-connection for diagnostic feature extraction. It was found that the sound energy level increases with the increase of engine load and speed, and the sound characteristics are closely correlated with the variation of in-cylinder pressure and combustion process. The continuous wavelet transform (CWT) was employed to analyse the non-stationary nature of engine noise in a higher frequency range. Before the wavelet analysis, time synchronous average (TSA) was used to enhance the signal-to-noise ratio (SNR) of the acoustic signal by suppressing the components which are asynchronous. Based on the root mean square (RMS) values of CWT coefficients, the effects of biodiesel fractions and operating conditions (speed and load) on combustion process and engine dynamics were investigated. The result leads to the potential of airborne acoustic measurements and analysis for engine condition monitoring and fuel quality evaluation.