Membrane reactor technology was used to overcome challenges in biodiesel production. The membrane reactor produces a permeate stream which readily phase separates at room temperature into a fatty acid methyl ester (FAME)-rich non-polar phase and a methanol- and glycerol-rich polar phase. To decrease the overall methanol:oil molar ratio in the reaction system, the polar phase was recycled. Three recycle ratios were tested: 100%, 75% and 50%, at the same residence time and operating conditions. The permeate consistently separated to yield a FAME-rich non-polar phase containing a minimum of 85 wt.%) FAME (the remainder being methanol) as well as a methanol/glycerol polar phase. At the highest recycle ratio, the FAME concentration ranged from 85.7 to 92.4 wt.% in the FAME-rich non-polar phase. In addition, the overall molar ratio of methanol:oil in the reaction system was significantly decreased to 10:1 while maintaining a FAME production rate of 0.04 kg/min. As a result, a high purity FAME product was produced. (C) 2007 Elsevier Ltd. All rights reserved.