**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

**FORM      10-QSB/A**

**Amendment      No. 1**

| x |   | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---|--------|------------------------------------------------------------------------------------------------------------------------------------------|

**FOR      THE QUARTERLY PERIOD ENDED September 30, 2006**

| o |   | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

**For      the transition period from to**
**                    **
**      to**
**                    **

**Commission      File Number: 001-32228**

**O2DIESEL      CORPORATION**

| Delaware(State                or OtherJurisdiction                of Incorporation) |   | 91-2023525(IRS                EmployerIdentification                No.) |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|

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**ITEM      6. EXHIBITS AND REPORTS ON FORM 8-K.**

| Exhibit |   |                                                                                                                                                                                                                                                       |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number  |   | Description                                                                                                                                                                                                                                                |
|    |   |                                                                                                                                                                                                                                                       |
|    |   |                                                                                                                                                                                                                                                       |
|    |   |                                                                                                                                                                                                                                                       |
| 10.1    |   | Form                of Incentive Stock Option Agreement (1)                                                                                                                                                                                                |
|    |   |                                                                                                                                                                                                                                                       |
| 10.2    |   | Common                Stock and Warrant Purchase Agreement. + (2)                                                                                                                                                                                     |
|    |   |                                                                                                                                                                                                                                                       |
| 10.3    |   | Supply                and Distribution Agreement. + (2)                                                                                                                                                                                               |
|    |   |                                                                                                                                                                                                                                                       |
| 10.4    |   | Form                of Warrant (2)                                                                                                                                                                                                                         |
|    |   |                                                                                                                                                                                                                                                       |
| 10.5    |   | Form                of Additional Warrant (2)                                                                                                                                                                                                              |
|    |   |                                                                                                                                                                                                                                                       |
| 10.6    |   | Amendment                No. 1 to the Common Stock and Warrant Purchase Agreement. +                (2)                                                                                                                                               |
|    |   |                                                                                                                                                                                                                                                       |
| 31.1    |   | Certification                of the Chief Executive Officer pursuant to Rule 13a-14(a) or                Rule 15d-14(a), as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002(2)                             |
|    |   |                                                                                                                                                                                                                                                       |
| 31.2    |   | Certification                of the Chief Financial Officer pursuant to Rule 13a-14(a) or                Rule 15d-14(a), as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002(2)                             |
|    |   |                                                                                                                                                                                                                                                       |
| 32.1    |   | Certification                of the Chief Executive Officer and Chief Financial Officer pursuant                to 18                U.S.C. Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002(2) |

|   |                                                                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Previously                filed as an exhibit to the Company's current report on Form 8-K/A                on                July 28, 2006, and incorporated herein by                reference.                                                                        |
|   |                                                                                                                                                                                                                                                                         |
| (2)    | Previously              filed as an exhibit to the Company's quarterly report on Form 10-QSB              for              the quarter ended September 30, 2006, as filed with the SEC on November              14, 2006, and incorporated herein by              reference. |