The process of transesterification is slow due to the low solubility of triglycerides in methanol. The limitation of mass transfer can be overcome by adding a co-solvent. Co-solvent FAME is the right choice because it is the product of the reaction itself so that it does not require a separation process. The purpose of this study was to examine the use of FAME as a co-solvent in the transesterification of palm oil and its application to the combustion engine. The operating conditions were palm oil mass of 250 gr, NaOH catalyst 1.2% wt, stirring speed 100 rpm, reaction temperature 70oC, ratio molar of oil:methanol =1:6, reaction time (5,10,15,20,25,30 minutes), and co-solvent (0,5,10,15% wt). After the optimum conditions are obtained, the next step is to make biodiesel on a semi pilot plant scale. Oil, methanol, NaOH and co-solvent were put into a stirred reactor and heated at a reaction temperature of 70⁰C. After the reaction is complete then it is flowed into the separator for separation by adding hot water to form 2 layers. The top layer is biodiesel which was analyzed and performance test on the combustion engine. The optimum condition of the process is a reaction time of 10 minutes and the addition of 10% co-solvent, with a yield of 76.7783%. The results of the analysis of SNI 7182:2012 states that biodiesel meets almost all requirements. From the biodiesel performance test on the combustion engine, B10 got quite satisfactory results for the torque and opacity test parameters.