Biodiesel, a renewable and sustainable alternative to fossil fuels, has garnered significant attention as a potential solution to the growing energy crisis and environmental concerns. The review commences with a thorough examination of feedstock selection and preparation, emphasizing the critical role of feedstock quality in ensuring optimal biodiesel production efficiency and quality. Next, it delves into the advancements in biodiesel applications, highlighting its versatility and potential to reduce greenhouse gas emissions and dependence on fossil fuels. The heart of the review focuses on transesterification, the key process in biodiesel production. It provides an in-depth analysis of various catalysts, including homogeneous, heterogeneous, enzyme-based, and nanomaterial catalysts, exploring their distinct characteristics and behavior during transesterification. The review also sheds light on the transesterification reaction mechanism and kinetics, emphasizing the importance of kinetic modeling in process optimization. Recent developments in biodiesel production, including feedstock selection, process optimization, and sustainability, are discussed, along with the challenges related to engine performance, emissions, and compatibility that hinder wider biodiesel adoption. The review concludes by emphasizing the need for ongoing research, development, and collaboration among academia, industry, and policymakers to address the challenges and pursue further research in biodiesel production. It outlines specific recommendations for future research, paving the way for the widespread adoption of biodiesel as a renewable energy source and fostering a cleaner and more sustainable future.