Biodiesel produced from oil‐rich feedstocks is known as a green replacement for conventional petroleum diesel. Transesterification is the common method used for biodiesel production. The enzymatic biodiesel production, using lipases, has recently been receiving extensive attention, due to its advantages over conventional alkali catalyzed process. The lipases can work at mild operating conditions, thus requiring less energy, with the ability to catalyze both triglycerides and free fatty acids (FFAs) from different oil sources, requiring fewer post‐production steps.Among the process challenges that face this process is the inhibition of the lipase with excessive use of alcohols, resulting in a decrease in biodiesel yield. The use of organic solvents, as a reaction medium, becomes essential in this case. However, most organic solvents are toxic and volatile with harmful impacts on the environmental. In addition, with the use of volatile organic solvents, an additional unit is required to separate them from the products, for the purification of the product and recycling of the solvent. In this paper, the prospect of using alternative solvents, specifically supercritical carbon dioxide (SC‐CO2) and ionic liquids (ILs), in enzymatic biodiesel production is presented. The properties of these alternative solvents, their advantages over organic solvents, factors affecting lipases activity and stability in these solvents, and the challenges facing process commercialization are discussed. © 2016 Society of Chemical Industry and John Wiley & Sons, Ltd