The transesterification of biodiesel using heterogeneous catalysts has recently caught interest because of its potential to overcome the limitations of homogeneous catalysts. Amongst the heterogeneous catalysts, CaO is well known for its superiority in the transesterification process due to its effectiveness, low cost, and low solubility in methanol. The paper covers the analysis of the transesterification process variables to identify the optimum condition of the process. The effect of process variables, which are catalyst concentration, methanol to oil molar ratio, and reaction temperature, and the interaction between variables on the yield of biodiesel from the esterification of palm oil using CaO catalyst was studied. Response Surface Methodology based on a three-variable central composite design was executed to optimize the process variables. It was found that the concentration of the catalysts is the primary variable affecting the reaction, the molar ratio of methanol to oil is the secondary and the temperature is the ternary. While the interaction between the two variables is not significant in the production of the biodiesel yield. The optimum yield of biodiesel of 98.56% was obtained at a catalyst concentration of 9.63 wt%, methanol to oil ratio of 15.30:1, and reaction temperature of 64.40 °C.