Modified CaO has been prepared and investigated in transesterification of rapeseed oil with methanol to determine its viability as a basic catalyst for use in biodiesel synthesis. It has been found that the fatty acid methyl esters (FAME) yield is greatly enhanced from 66.2 to 96.5% over modified CaO with methanol/oil ratio of 15:1 at 65 degrees C after 4 h. Furthermore, the good catalytic activity, 83.8% yield of FAME, remains even in the 2% water-contained condition over modified CaO. The catalyst has been characterized by Brunaure-Emett-Teller (BET), X-ray diffraction (XRD), thermogravimetric analysis (TGA), and Fourier transform infrared spectrometry (FI-IR).