The push to find alternatives to fossil fuels has driven research and consumption of biofuels. Recent actions in the United States have placed an emphasis on the use of renewable fuels for improved sustainability of government operations. In 2013, the United States Army Corps of Engineers (USACE) measured atmospheric emissions from two navigation vessels consuming three different fuel types and found that biofuels have the potential to lower atmospheric emissions. These fuels have widely different production processes, however, and a full life‐cycle assessment is necessary to provide a complete picture of these biofuels. The goal of this study was to identify whether transitioning navigation vessels to operate on biodiesel would have the potential to lower human health and environmental impacts. This study focuses on the complete life cycle of these fuels in USACE marine vessels by employing a well‐to‐wheels life‐cycle assessment comparing the impacts of a 100% soy‐based biodiesel and an algal‐based biodiesel blend to a conventional diesel. Overall, soybean‐based biodiesel had lower impacts compared to algal‐based biodiesel. Impacts from conventional diesel were generally lower than algal‐based biodiesel, but impacts between conventional diesel and soybean‐based biodiesel were mixed. While greenhouse gas emissions during the use phase were reduced for the biofuels (after considering only the non‐biogenic fraction of carbon emission), a complete look at the life‐cycle resulted in cases where emissions could be greater than conventional diesel. Biodiesel impacts depended greatly on modeling assumptions made in the life‐cycle system boundaries and inventory such as allocation method and assumptions about feedstock growth and harvesting. Published 2015. This article is a U.S. Government work and is in the public domain in the USA.