Biodiesel as renewable, environmental friendly, less toxic, and biodegradable is an attractive alternative to fossil fuels and is produced mainly from vegetable oils and animal fats. It is expected, globally, that the use of renewable biofuels, in general, will increase rapidly in the near future. The growing biodiesel production and usage have encouraged assessment of its impact on the environment. The present paper reviews various aspects of biodiesel production using commercial processing technology and biodiesel use through evaluation and analysis of the studies concerning environmental impacts of biodiesel. As a general conclusion, it can be said that biodiesel has the potential to offer a series of perceived benefits such as political, economical, and agricultural, as well as environmental (due to its biodegradability, less toxicity, renewability) and health (greenhouse gas-saving, less harmful exhaust emissions).