Biodiesel production has received considerable attention in the recent past as a biodegradable and nonpolluting fuel. The production of biodiesel by transesterification process employing alkali catalyst has been industrially accepted for its high conversion and reaction rates. Recently, enzymatic transesterification has attracted much attention for biodiesel production as it produces high purity product and enables easy separation from the byproduct, glycerol. But the cost of enzyme remains a barrier for its industrial implementation. In order to increase the cost effectiveness of the process, the enzyme (both intracellular and extracellular) is reused by immobilizing in a suitable biomass support particle and that has resulted in considerable increase in efficiency. But the activity of immobilized enzyme is inhibited by methanol and glycerol which are present in the reacting mixture. The use of tert-butanol as solvent, continuous removal of glycerol, stepwise addition of methanol are found to reduce the inhibitory effects thereby increasing the cost effectiveness of the process. The present review analyzes these methods reported in literature and also suggests a suitable method for commercialization of the enzymatic process. (C) 2007 Elsevier Ltd. All rights reserved.