Experiments are performed on a diesel engine working in a single-fuel mode using fossil diesel (FD) as well as 5% and 10% (v/v) di-ethyl ether (DEE) additives with FD as fuels as well as in dual-fuel mode using the aforementioned fuels as pilot fuels along with producer gas (PG) as a primary fuel. This study aims to draw comparative analyses of engine combustion, performance, and emission characteristics using the aforementioned fuel combinations to establish the most suitable fuel strategy for a diesel engine. The study revealed greater control over nitric oxide (NO) and smoke opacity in dual-fuel mode compared to single-fuel mode operations. The addition of DEE with FD produced lower hydrocarbon (HC) and carbon monoxide (CO) emissions and comparable NO emissions along with reduced smoke opacity compared to FD in both modes of operation. Furthermore, in a dual-fuel mode operation, the diesel percentage energy substitution (PES) reduced with an increase in the DEE content in the blends. The trade-off study involving engine performance and emissions with respect to the cost of operation revealed that the fuel strategy used in dual-fuel mode operation delivered better engine performance along with reduced NO emission and smoke opacity at lower operational cost compared to all the considered fuel strategy in single-fuel mode operation. Especially, FD + 5% DEE + PG and FD + 10% DEE + PG fuel strategies were found to be the most suitable dual-fuel mode combinations in a diesel engine in terms of their superior engine performance and lower emissions along with better economy.