A limited quantity of oil, the purchase of which also involves major expenses has become an important factor for intensive search and use of alternative fuels. Biodiesel is used in diesel engines, and is manufactured from vegetable oils, animal fats and recycled edible oils. The production and use of biodiesel are very important not only because of its economic and strategic connotations but also because of its environmental advantages. Favourable conditions in Croatia give good opportunities for a self-sufficient oil rape production, possibility for its intensification and employment of a number of people in both the agricultural production and biodiesel production plants. This paper presents a survey of the biodiesel fuel production, the characteristics and impacts it has on the biodiesel engine features as well as its impact on the environment.