An overflow system for continuous esterification of palm fatty acid distillate (PFAD) using an economical process was developed using a continuous stirred tank reactor (CSTR). Continuous production compared to batch production at the same condition had higher product purity. The optimum condition for the esterification process was a 8.8:1:0.05 molar ratio of methanol to PFAD to sulfuric acid catalyst, 60 min of residence time at 75 degrees C under its own pressure. The free fatty acid (FFA) content in the PFAD was reduced from 93 to less than 1.5%wt by optimum esterification. The esterified product had to be neutralized with 10.24%wt of 3 M sodium hydroxide in water solution at a reaction temperature of 80 degrees C for 20 min to reduce the residual FFA and glycerides. The components and properties of fatty acid methyl ester (FAME) could meet the standard requirements for biodiesel fuel. Eventually the production costs were calculated to disclose its commercialization. (C) 2008 Elsevier Ltd. All rights reserved.