Biodiesel, an environmentally degradable and renewable biofuel derived from organic matter, has exhibited its capacity as a viable and sustainable substitute for traditional diesel fuel. Numerous comprehensive investigations have been conducted to assess the effects of biodiesel on internal combustion engines (ICEs), with particular emphasis on diesel engine performance metrics, combustion dynamics, and emission profiles. Biodiesel demonstrates a significant decrease in emissions of particulate matter (PM), hydrocarbon (HC), and carbon monoxide (CO) in diesel engines. The addition of biodiesel has shown a minor decrease in power output and a slight increase in fuel consumption and nitrogen oxide (NOx) emissions. Nevertheless, the extensive implementation of biodiesel, despite its potential to effectively reduce detrimental emissions, has encountered obstacles stemming from external influences including restricted availability of feedstock, volatile petroleum oil prices, and inadequate governmental backing. This review presents a concise summary of significant advancements in the global adoption of biodiesel from a sustainability perspective. This review provides valuable insights into the challenges and opportunities associated with the advancement of sustainable biofuel technologies by synthesizing the current state of palm biodiesel and examining global trends in biodiesel implementation. The wider adoption of biodiesel can be facilitated by addressing concerns pertaining to feedstock availability, price stability, and policy support. This would allow for the realization of significant environmental advantages and contribute to a more environmentally friendly and sustainable biofuel.