The potential groundwater impacts of biodiesel releases have received limited attention despite the increasing probability of such events. In this work, microcosms were prepared with unacclimated sediment and groundwater from the Ressacada Experimental Site (Florianopolis, Santa Catarina, Brazil) and spiked with 54.8 mg/L of pure soybean or castor oil biodiesel (B100). Oxygen was purged from the microcosms to mimic commonly anoxic and hypoxic conditions at fuel‐impacted sites; low background concentrations of nitrate (1.2 to 2.5 mg/L) and sulfate (2.2 to 3.0 mg/L) were present. Biodegradation was assessed by the removal of fatty acid methyl esters and hydrocarbon components relative to sterile controls. Approximately 80% of soybean biodiesel was biotransformed in 41 d, compared to only 40% of castor oil biodiesel removed in 90 d. The higher persistence of castor biodiesel was attributed to its higher viscosity and lower bioavailability. Additional microcosms were prepared similarly to assess the impact of biodiesel on hydrocarbon degradation. These microcosms were spiked with benzene (2.9 mg/L) and toluene (0.8 mg/L) with or without soybean biodiesel (54.8 mg/L). The biodiesel had an inhibitory effect, increasing the time required to remove toluene from 25 to 34 d. Similarly, 45% of benzene was removed in the presence of biodiesel within 34 d, compared to 90% in the absence of biodiesel. Overall, we postulate that the relatively high viscosity of biodiesel is conducive to limited migration potential and a smaller but longer lasting inhibitory region of influence, compared to that exerted by more soluble, more mobile, and readily degradable biofuels such as ethanol. However, controlled release studies are needed to test this hypothesis and characterize the complex dynamics of such releases.