The chemical and phase equilibrium is important to be computed simultaneously in lipid transesterification which occurs in a two-phase system. Such analysis is highly desired to ease the reactor design and optimization problems. The objective of this study is to conduct a thorough investigation on lipid transesterification in a continuous stirred tank reactor (CSTR) with the consideration of chemical phase equilibrium (CPE) via modeling and simulation analysis. The transesterification of canola oil with methanol to fatty acid methyl ester was considered in this study. The UNIQUAC thermodynamic model was used to investigate the liquid-liquid equilibrium (LLE) behavior of the six-component system formed during the biodiesel production. By comparing the LLE behavior between ternary and six-component systems, the data shows that six-component system gave a better representation of the main phase variation in the transesterification process. In addition, the CPE model developed in this study was verified by comparing the simulated results with the results obtained from the transesterification reaction experiments in CSTR. The results obtained from the CPE model analysis show that the proposed CPE model is adequate to be used for the description of simultaneous chemical reaction and phase equilibrium during the transesterifcation process at an acceptable accuracy. The CPE investigation shows that if an efficient reaction needs to be achieved, the CPE needs to be controlled to obtain higher concentration gradients between the two reacting phases. (C) 2012 Elsevier Ltd. All rights reserved.