Abstract: Biodiesel is a fuel, which can be produced by the chemical process of reacting vegetable oils or animal fats (transesterification). Biodiesel is receiving increasing attention as an alternative, non-toxic, biodegradable and renewable diesel fuel. Many studies have shown that the properties of biodiesel are very close to that of diesel fuel. Therefore, biodiesel can be used in diesel engine with little or no engine modification. Based on the statistical data of DOE (the U.S. Department of Energy), the whole picture of biodiesel, which includes energy consumption and yield, emissions and tailpipe emissions were analyzed by the method called "life cycle analysis". The life cycles begin with the extraction of all raw materials to make petroleum diesel and biodiesel, and end with using the fuels in an engine. Examining global issues, such as CO₂ emissions, requires a comprehensive life cycle analysis. The biodiesel energy balance, its effect on greenhouse gas emissions, and on the regulated gas emissions and solid waste pollutants were investigated in each step needed to make biodiesel and diesel fuel. This paper provides an overview of biodiesel production and biodiesel consumption in the engine. It includes data on energy and emissions for petroleum diesel and biodiesel. It concludes that fossil energy ratio of biodiesel is four times that of petroleum diesel; biodiesel reduces net CO₂ emissions by 78.45% compared to petroleum diesel in the life cycle. On the other hand, the tailpipe emissions of biodiesel such as CO, HC and PM are 46%, 37% and 68% lower than that of petroleum diesel, respectively, except the NO_x, which is 8.89% higher than petroleum diesel.