Biodiesel, the fatty acid alkyl esters derived from vegetable oils, animal fats, or waste cooking oils, is an alternative to diesel fuel. One of the major technical issues with the use of biodiesel is its susceptibility to oxidation. Oxidation of biodiesel is a complex process which involves a number of mechanisms producing an array of chemical components such as aldehydes, acids, ketones, and oligomeric compounds. These components in turn increase the viscosity and deposits in the fuel beyond acceptable levels. A variety of factors affect the level of these decomposition products as well as the rate of formation and decay. These factors include the temperature, presence of light, catalytic metals in the fuel system, sump oil, or storage containers, type of biodiesel, fatty acid profile, blend level, other contaminants, and presence of antioxidants. This paper examines the relevant factors influencing the biodiesel oxidative stability, the methods used to analyse and test biodiesel oxidation, as well as the effect that oxidation has on the fuel's properties.