Transesterification is affected by the free fatty acid (FFA) content of vegetable oils or animal fats. A two-step H2SO4/CaO-catalyzed methanolysis process has been employed for the efficient conversion of Jatropha curcas crude oil, which has an acid value greater than 30 mg KOH/g, into fatty acid methyl ester (FAME). The effects of H2SO4 catalyst addition, of FFA, and of the water produced as a by-product are investigated. The maximum esterification activity of the initial FFA content are obtained with 0.5-1.2 wt% H2SO4 relative to Jatropha crude oil. The esterification product is used as the substrate for a second, CaO-catalyzed, transesterification. Water usually has an adverse effect on transesterification; however, this study proves that the effect of water is negligible. Using this two-step methanolysis reaction, a FAME level greater than 96% can be obtained in the final product.