Lipase-catalyzed transesterification of triglycerides and alcohols to obtain biodiesel is an environmentally friendly and sustainable route for fuels production since, besides proceeding in mild reaction conditions, it allows for the use of low-cost feedstocks that contain water and free fatty acids, for example non-edible oils and waste oils. This review article reports recent advances in the field and focus in particular on a major issue in the enzymatic process, the inactivation of most lipases caused by methanol, the preferred acyl acceptor used for alcoholysis. The recent results about immobilization of enzymes on nano-materials and the use of whole-cell biocatalysts, as well as the use of cell-surface display technologies and metabolic engineering strategies for microbial production of biodiesel are described. It is discussed also insight into the effects of methanol on lipases obtained by modeling approaches and report on studies aimed at mining novel alcohol stable enzymes or at improving robustness in existing ones by protein engineering.