Ethanol is an oxygen‐containing renewable clean fuel. The use of ethanol in engines can reduce greenhouse emissions and pollutant emissions of NOx and soot. However, ethanol has limited solubility in diesel fuel. Polyoxymethylene dimethyl ethers (PODE) can improve the miscibility and cetane number of ethanol‐diesel blend. To evaluate the solubilizing ability of PODE on the mixture of ethanol and diesel, the phase behavior of the ternary system (PODE, anhydrous ethanol, and diesel) was investigated at different ambient temperatures. Additionally, the blend can easily absorb water from ambient humidity because of the additional ethanol, which may cause phase separation. Thus, the effect of water addition on the phase behavior of the system was studied. In the current study, the blend of ethanol (100%, 98%, 95% purity) and diesel fuel was used as a solute with different diesel blending ratios. Then, PODE was gradually added into blend until phase boundaries of ternary system appeared. Results show that the ability of PODE in the blend is greatly affected by ambient temperature, particularly above 10°C. The addition of water greatly destroys the phase stability of the ternary system and increases demand for PODE due to the hydrophobicity of diesel.