Biodiesel outperforms diesel in emissions and engine performance. They burn efficiently in diesel engines and are eco‐friendly. Since cashew nut shell liquid (CNSO) is waste, commercial biodiesel production from it should be profitable. CNSO is cheap and can reduce cashew processing factory waste. From cashew kernels, CNSL is extracted using various mechanical, thermal, and solvent extraction techniques. This article examines current research into using cashew nutshell liquid biodiesel (CNSLBD) in diesel engines. The work also discusses Indian biodiesel demand, availability, export information, life cycle cost analysis, cost economics of per hectare yield, Indian government initiative of CNSO. This review also evaluates the viability of this fuel as an alternative energy source. CNSLBD is a prospective alternative fuel that has the potential to benefit both the cashew nut industry and the energy industry. In addition to this, the study examines the procedures for extracting CNSO. According to the findings of the study, CNSO is a prospective alternative fuel that has the potential to benefit both the cashew nut industry and the energy industry.