Abstract The increasing need for high‐quality diesel fuel can be fulfilled by using environmental friendly, high‐performance additives. We have synthesized novel fatty acid‐derived multifunctional additives coupled with phosphazene moiety having the backbone of alternative nitrogen and phosphorous atoms which provided stability, while the additives possessed affinity for the metal surface to form a surface‐complex film leading to the hindered metal contact and providing friction‐reducing and antiwear properties. In addition, the applicability of the synthesized additives was investigated by testing the anti‐oxidant and anticorrosion properties in polyethylene glycol (PEG200) which was taken as the reference base fluid. A rotating bomb oxidation test was used to evaluate the anti‐oxidant characteristics, and a four‐ball test for the tribological properties. Among the synthesized additives, phosphazene ester of erucic acid exhibited the best antiwear and antifriction properties; however, phosphazene ester of oleic acid was found to be the best anti‐oxidant additive.