One of the key challenges in using fossil fuels is the environmental impacts of these energy sources, and to reduce these destructive effects, the use of renewable energy sources (biofuels) is necessary. One of the important biofuels is biodiesel, which can be produced from cottonseed. To properly manage the chain dealing with biodiesel production from the cottonseed chain (from farm to manufactory), environmental hotspots must be pinpointed. In the present study, it was attempted to examine the environmental impacts of the biodiesel production cycle from cottonseed (agronomic stages, ginning, oiling, and biodiesel production). The data obtained in all three stages were analyzed by the Impact 2002+ method in the SimaPro software. The highest contribution to creating environmental indicators at the agricultural stage was related to the use of nitrogen fertilizers, direct emission from the farm and fossil fuels, the ginning and oiling stage involving the use of diesel fuel and sulfuric acid, and the production of biodiesel in the manufactory involving the use of methanol and electricity. The potential environmental impacts of a functional unit of 1 kg of biodiesel include: human health, 9.05–10−6 (DAYLY); ecosystem quality, 1.369 (PDF*m2*year); climate changes, (kg CO2 eq.) 17.247; and resources (MJ primary), 89.116. Results showed that agriculture has more significant participation in the environmental impact than other sections (ginning and oiling and biodiesel production), especially due to the application of fertilizers and fuel. Surveying the environmental indicators of the results showed that at the agricultural stage, the human health indicator is 10.43, 1.21, and 5.32 times higher than the ecosystem quality, climate change, and resource indicators, respectively; at the ginning and oiling stages, it is 2.35, 31.68, and 2.09 times higher, respectively; and at the stage of biodiesel production in the manufactory, it is 16.41, 1.96, and 0.99 times higher, respectively, in terms of the destructive effects. The overall results showed that the hotspot points in the present study can be largely modified by reducing the consumption of nitrogen fertilizers, using new equipment and machinery, ginning and oiling, and using fewer methanol ratios than oil.