In "Diesel Engine Exhaust Carcinogenic" (PDF), the IARC says that "there has been mounting concern about the cancer-causing potential of diesel exhaust" and that it "found that diesel exhaust is a cause of lung cancer (sufficient evidence) and also noted a positive association (limited evidence) with an increased risk of bladder cancer." The IARC has considered diesel exhaust "probably carcinogenic to humans" since 1988, but hasn't been able to more concretely study the issue until now. Given that "large populations are exposed to diesel exhaust in everyday life, whether through their occupation or through the ambient air," it's been a long 24 years waiting.
In that time, new diesel engines have gotten cleaner, to which the IARC says:
What about diesel's petroleum cousin, gasoline? As it has since 1988, the IARC still says gasoline engine fumes are "possibly carcinogenic."
Increasing environmental concerns over the past two decades have resulted in regulatory action in North America, Europe and elsewhere with successively tighter emission standards for both diesel and gasoline engines. There is a strong interplay between standards and technology – standards drive technology and new technology enables more stringent standards. For diesel engines, this required changes in the fuel such as marked decreases in sulfur content, changes in engine design to burn diesel fuel more efficiently and reductions in emissions through exhaust control technology.
However, while the amount of particulates and chemicals are reduced with these changes, it is not yet clear how the quantitative and qualitative changes may translate into altered health effects ... In addition, existing fuels and vehicles without these modifications will take many years to be replaced, particularly in less developed countries.
It's not just exhaust fumes that are likely hurting us. A new report from the journal Environmental Science & Technology says that brake dust, tire fragments and even tiny bits of road can get into the air and that "these non-exhaust emissions make up a similar proportion of the airborne particulate matter (PM) resulting from vehicle use as exhaust emissions." It's messy out there.