The production of biodiesel by transesterification employing acid or base catalyst has been industrially accepted for its high conversion and reaction rates. Downstream processing costs and environmental problems associated with biodiesel production and byproducts recovery have led to the search for alternative production methods. Recently, enzymatic transesterification involving lipases has attracted attention for biodiesel production as it produces high purity product and enables easy separation from the byproduct, glycerol. The use of immobilized lipases and immobilized whole cells may lower the overall cost, while presenting less downstream processing problems, to biodiesel production. The present review gives an overview on biodiesel production technology and analyzes the factors/methods of enzymatic approach reported in the literature and also suggests suitable method on the basis of evidence for industrial production of biodiesel.