In this study, transesterification of canola oil with methanol has been studied in a heterogeneous system, using MgO-supported KOH catalysts. All of the catalysts were prepared by incipient-wetness impregnation of an aqueous solution of KOH on MgO support. Effects of the methanol/canola oil molar ratio, reaction temperature, loadings of KOH, and reaction time in biodiesel production were investigated. The catalyst with 20 wt % KOH loaded on MgO gave the highest basicity and the best catalytic activity for this reaction. The highest conversion of canola oil of 99.36% and the highest FAME yield of 95.05% were obtained.