The primary intent for previous continuous hydrolysis studies was to minimize the reaction temperature and reaction time. In this work, hydrolysis is the first step of a proprietary chemical process to convert lipids to sustainable, drop-in replacements for petroleum based fuels. To improve the economics of the process, attention is now focused on optimizing the energy efficiency of the process, maximizing the reaction rate, and improving the recovery of the glycerol by-product. A laboratory-scale reactor system has been designed and built with this goal in mind. Sweet water (water with glycerol from the hydrolysis reaction) is routed to a distillation column and heated above the boiling point of water at the reaction pressure. The steam pressure allows the steam to return to the reactor without pumping. Direct injection of steam into the hydrolysis reactor is shown to provide favorable equilibrium conditions resulting in a high quality of FFA product and rapid reaction rate, even without preheating the inlet water and oil and with lower reactor temperatures and lower fresh water demand. The high enthalpy of the steam provides energy for the hydrolysis reaction. Steam injection offers enhanced conditions for continuous hydrolysis of triglycerides to high-purity streams of FFA and glycerol. (C) 2012 Elsevier B.V. All rights reserved.