Considering the current rate of extraction, Malaysia's crude oil reserves are expected to diminish after 20 years. The anticipated diminution of fossil fuel reserves are the main reason for the exploration of alternatives to petroleum diesel. Malaysia introduced its biofuel policy in the year 2005 with an objective to reduce the country's fuel import bill, further promoting the demand for palm oil, which is expected to be the primary commodity for biofuel production in Malaysia as well as to shore up the price of palm oil. The present review article discussed the progress of biodiesel in Malaysia with a special emphasis on the development, benefits, and policies.