Nowadays, to decrease environmental pollution and dependence on fossil-based fuels, research on alternative renewable energy sources has been increasing. One such renewable energy source is biodiesel, which is used as an alternative fuel for diesel engines. Biodiesel is renewable, nontoxic, biodegradable, and environmentally friendly. Biodiesel is domestically produced from vegetable oil (edible or nonedible), animal fat, and used cooking oils. In the biodiesel production process, oil or fat undergoes transesterification reaction through use of simple alcohols such as methanol, ethanol, propanol, butanol, etc. Use of methanol is most feasible because of its low cost, and physical and chemical advantages. Acid catalysis, alkali catalysis, and enzyme catalysis are usually used to improve the reaction rate and yield. Glycerol is a byproduct of the reaction and can be used as an industrial raw material. In this study, biodiesel production methods (direct use, pyrolysis, microemulsion, transesterification, supercritical processes, ultrasound-assisted, and microwave-assisted) and types of catalyst (homogeneous, heterogeneous, and enzyme) have been evaluated and compared. In addition, the effects of biodiesel and its blends on diesel engine performance and exhaust emissions are described and reviewed.