The enzymatic production of biodiesel by transesterification of cottonseed oil was studied using low cost crude pancreatic lipase as catalyst in a batch system. The effects of the critical process parameters including water percentage, methanol:oil ratio, enzyme concentration, buffer pH and reaction temperature were determined. Maximum conversion of 75-80% was achieved after 4 h at 37 degrees C. pH 7.0 and with 1:15 M ratio of oil to methanol, 0.5% (wt of oil) enzyme and water concentration of 5% (wt of oil). Various organic solvents were tested among which a partially polar solvent (t-butanol) was found to be suitable for the reaction. The major fuel characteristics like specific gravity, kinematic viscosity, flash point and calorific value of the 20:80 blends (B20) of the fatty acid methyl esters with petroleum diesel conformed very closely to those of American Society for Testing Materials (ASTM) standards. (C) 2010 Elsevier Ltd. All rights reserved.