Biodiesel is a natural, renewable transportation fuel. Biodiesel is the best candidate for diesel fuels in diesel engines with no alterations. Biodiesel is a nontoxic, biodegradable alternative to petroleum diesel that substantially reduces air pollution. Biodiesel fuel typically comprises lower alkyl fatty acid (chain length C14-C22), esters of short-chain alcohols, primarily, methanol or ethanol. Methyl esters of vegetable oils have several outstanding advantages over other new-renewable and clean engine fuel alternatives. Biodiesel production using inedible vegetable oil, waste oil, and grease has become more attractive recently. The economic performance of a biodiesel plant can be determined once certain factors are identified, such as plant capacity, process technology, raw material cost, and chemical costs. The cost of biodiesel fuels varies depending on the base stock, geographic area, variability in crop production from season to season, the price of crude petroleum, and other factors. Biodiesel seems to be a realistic fuel for the future; it has become more attractive recently because of its environmental benefits.