A fuel filter is placed in the fuel line of most internal combustion engines which filters out dust and rust particles from the fuel, as unfiltered fuel may contain several contaminants from its prior storage tank along with dirt. If these substances are not removed before the fuel enters the injection system, they will cause rapid wear and tear due to their abrasive action. Besides, fuel filters also improve the performance of the system. Fuel filters need to be periodically replaced or cleaned, else it will cause a restriction in fuel flow, resulting in a drop in the engine performance.
Some fuel filters, especially on diesel engines, are of a bowl-like design which collects water at the bottom, which can be drained out. The collection of water is also indicated by a water sensor to signal on the dashboard. Close to the diesel fuel filter, there may also be a fuel heater to avoid the formation of paraffin wax inside the filtrating element which would ultimately stop the fuel flow to the engine.