An integrated process for converting low-value paraffinic materials to high octane gasoline and high-cetane diesel light is disclosed. The process involves: (1) oxidation of an iso-paraffin to alkyl hydroperoxide and alcohol; (2) converting the alkyl hydroperoxide and alcohol to dialkyl peroxide; (3) converting low-octane, paraffinic gasoline molecules using the dialkyl peroxides as radical initiators, thereby forming high-cetane diesel, while the dialkyl peroxide is converted to an alcohol; (4) converting the alcohol to an olefin; and (5) alkylating the olefin with iso-butane to form high-octane alkylate. The net reaction is thus conversion of iso-paraffin to high-octane gasoline alkylate, and conversion of low-octane paraffinic gasoline to high-cetane diesel.