Abstract: In recent years, the biomass diesel has been researched and tested in CAAERP, and techno-economic assessment was done. Since 1985, the cottonseed oil has been used as the material to conduct experiment, which include puting catalyst, esterification reaction and rinsing process, and then the substitute fuel that isequivelent diesel 0^#-the biomass diesel was output. It is simple in production technology and easier tomaster, and feasible in technique. Whether or not the biomass diesel can been producted in large scale, depend upon local resources and economy. The analysis indicates that using the food oil as material derectly to product substitute diesel is infeasible recently. However, cost can been lower through integrated utility of products. Thus, the potential of biomass diesel is very high. Substitution of liquid fuel has a wide prospect.