Biodiesel is a renewable fuel that is usually narrowly defined as esters of lower alcohol and fatty acids, where the fatty acids are derived from vegetable oil, animal fat, or tallow. Biodiesel development was driven by the need to (1) increase security of energy supply for the transportation sector by having a renewable source at hand, (2) have an environmentally friendly fuel available for the diesel combustion engine, (3) reduce health risks, and (4) provide the customer with a reliable fuel at a reasonable cost‐benefit ratio. The production, quality, source materials, environmental benefits, and use of biodiesel are reviewed.