Biodiesel has been receiving increasing attention due to its renewable nature, lower pollution potential and green house gas benefit compared to mineral diesel. There are numerous factors, which affect the yield of biodiesel in a transesterification process such as reaction temperature, molar ratio of alcohol to oil, catalyst concentration, stirring speed, reaction time, etc. These variables are different for different vegetable oils and they are also affected by the free fatty acid content of the oil. In the present investigation, an attempt has been made to optimise the production process of biodiesel from Karanja oil, which is essentially a non‐edible oil. This oil is tree‐borne and has a great potential to produce good quality biodiesel in large quantities. In the present investigation, a large array of experiments were carried out on transesterification of Karanja oil with methanol to produce biodiesel under different reaction conditions and an attempt has been made to analyse the effect of various reaction conditions on biodiesel yield. The optimised yield of methyl esters from Karanja oil under the optimal condition was found to be 98‐100% (w/woil). [Received: February 21, 2009; Accepted: April 30, 2009]