Biodiesel production in Brazil has grown from 736 m(3) in 2007 to 2.7 Mm(3) in 2012. It is an emergent bioenergy for which it is important to guarantee environmental sustainability. The objective of this article is to characterise the biodiesel production chain in Brazil, to identify potential environmental impacts and to analyse key drivers and barriers for biodiesel environmental sustainability. This article explores these aspects and focusses on the increasing demand for the main feedstocks for biodiesel production in Brazil: soybean oil and beef tallow. The impacts of land use and land-use change on greenhouse gas emissions, biodiversity and water, as well as the energy balance, were found to be critical for the environmental sustainability assessment and development of biodiesel chains. Increasing agriculture yields, diversifying feedstocks and adopting ethyl transesterification can contribute to minimise environmental impacts. It was also found that environmental impacts could be mitigated by appropriate policies aiming at an integrated optimisation of food and bioenergy production and through agro-economic-ecological zoning, allowing adequate use of land for each purpose. Despite the limitation and weakness of some sustainability tools and initiatives, certification and zoning can play an important role in the sustainability of the emerging biodiesel production in Brazil. (C) 2013 Elsevier Ltd. All rights reserved.