1-Methyl-3-butyl imidazole hydroxide ionic liquid, which was used as a catalyst for producing biodiesel from waste oil, was synthesized and characterized by Fourier transform-infrared spectroscopy and nuclear magnetic resonance spectroscopy. The effects of relevant factors on the transesterification were investigated by a designing orthogonal test. The physicochemical properties of the products were measured and the blending test of the produced biodiesel with 0(#) diesel was also examined. The experimental results showed that the 1-methyl-3-butyl imidazole hydroxide ionic liquid was a novel highly active and reusable biodiesel production catalyst. The conversion of fatty acid methyl ester reached 95.7% at the optimized reaction conditions of 3 wt% of catalyst addition amount to feed oil, 8:1 alcohol to oil molar ratio, 70 degrees C of reaction temperature, and 110 min of reaction time. The biodiesel product indicated better fluidity at low temperature and high flash point except that the iodine value was a little high. The main physicochemical properties of the product attained to the standard of 0# diesel and the produced biodiesel could be blended with 0(#) diesel in all proportions before application. The performance of the diesel was improved by blending with the biodiesel.