The partial hydrogenation of jatropha–oil–derived biodiesel fuel (BDF) with a high degree of unsaturated fatty acid tails was successfully performed on an alumina‐supported palladium catalyst, denoted Pd/γ‐Al2O3, under mild conditions (100 °C and 0.5 MPa) to produce hydrotreated fatty acid methyl esters (H‐FAMEs) enriched in monounsaturated components. Trace amounts of peroxides contained in the oil feedstock or the co‐feeding of proper amounts of molecular oxygen (400–1500 ppm) resulted in enhanced activity and durability of Pd/γ‐Al2O3. The produced H‐FAMEs exhibited significantly improved oxidation stability and uncompromised cold‐flow properties, and they can serve as an excellent source of high‐quality BDFs, particularly for high‐blend fuels.