There is an increasing interest in many countries to search for suitable alternative fuels that are environment friendly. Although straight vegetable oils can be used in diesel engines, their high viscosities, low volatilities and poor cold flow properties have led to the investigation of various derivatives. Biodiesel is a fatty acid alkyl ester, which can be derived from any vegetable oil by transesterification. Biodiesel is a renewable, biodegradable and non-toxic fuel. In this study, Mahua oil (Madhuca indica seed oil) was transesterified with methanol using sodium hydroxide as catalyst to obtain mahua oil methyl ester. This biodiesel was tested in a single cylinder, four stroke, direct injection, constant speed, compression ignition diesel engine (Kirloskar) to evaluate the performance and emissions. (C) 2004 Elsevier Ltd. All rights reserved.