Biodiesel, with its nature of cleanliness, biodegradability, and renewability, has emerged as a promising alternative to fossil fuels, offering environmental benefits and energy security. It has also been utilized over the years to enhance energy self-sufficiency, reduce import costs, and bolster domestic transportation for agricultural development. However, its widespread adoption hinges on overcoming economic and market barriers. This chapter examines cutting-edge technological innovations in biodiesel production, as well as key operating factors such as reactor structure, temperature, molar ratio of alcohol to oil, cavitation, catalyst, and time, that enhance cost-effectiveness, scalability, and integration into existing energy markets. It examines feedstock diversification, process optimization, biotechnological advances, and digital tools that collectively shape the future of biodiesel. Non-edible oils, waste cooking oil, animal fats, and algal biomass are increasingly explored to mitigate the “food versus fuel” dilemma and improve economic feasibility. Advances in catalytic systems, including heterogeneous catalysts, enzyme-based transesterification, and supercritical fluid technologies, have significantly improved reaction rates, reduced energy consumption, and enabled the use of low-cost, high-FFA feedstocks. Digital tools and AI-driven optimization are reshaping biodiesel production by enabling real-time monitoring, predictive modeling, and process intensification. These innovations, coupled with supportive policy frameworks, carbon credit schemes, and renewable fuel mandates, are accelerating biodiesel’s integration into mainstream energy markets. Furthermore, integrated biorefineries that co-produce biodiesel alongside high-value chemicals such as glycerol derivatives and bioethanol enhance profitability and resource utilization. Ultimately, technological innovation is the linchpin for biodiesel’s economic viability and market competitiveness, positioning it as a scalable, sustainable, and strategic contributor to global energy transition.