The chemical-catalyzed transesterification of vegetable oils to biodiesel has been industrially adopted due to its high conversion rates and low production time. However, this process suffers from several inherent drawbacks related to energy-intensive and environmentally unfriendly processing steps such as catalyst and product recovery, and waste water treatment. This has led to the development of the immobilized enzyme catalyzed process for biodiesel production which is characterized by certain environmental and economical advantages over the conventional chemical method. These include room-temperature reaction conditions, elimination of treatment costs associated with recovery of chemical catalysts, enzyme re-use, high substrate specificity, the ability to convert both free fatty acids and triglycerides to biodiesel in one step, lower alcohol to oil ratio, avoidance of side reactions and minimized impurities, easier product separation and recovery: biodegradability and environmental acceptance. This paper provides a comprehensive review of the current state of advancements in the enzymatic transesterification of oils. A thorough analysis of recent biotechnological progress is presented in the context of present technological challenges and future developmental opportunities aimed at bringing the enzyme costs down and improving the overall process economics towards large scale production of enzymatic biodiesel. As the major obstacles that impede industrial production of enzymatic biodiesel is the enzyme cost and conversion efficiency, this topic is addressed in greater detail in the review. A better understanding and control of the underpinning mechanisms of the enzymatic biodiesel process would lead to improved process efficiency and economics. The yield and conversion efficiency of enzymatic catalysis is influenced by a number of factors such as the nature and properties of the enzyme catalyst, enzyme and whole cell immobilization techniques, enzyme pretreatment, biodiesel substrates, acyl acceptors and their step-wise addition, use of solvents, operating conditions of enzymatic catalysis, bioreactor design. The ability of lipase to catalyze the synthesis of alkyl esters from low-cost feedstock with high free fatty acid content such as waste cooking oil, grease and tallow would lower the cost of enzymatic biodiesel. Discovery and engineering of new and robust lipases with high activity, thermostability and resistance to inhibition are needed for the establishment of a cost-effective enzymatic process. Opportunities to create a sustainable and eco-friendly pathway for production of enzymatic biodiesel from renewable resources are discussed. (C) 2014 Elsevier Ltd. All rights reserved.