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The economic development of a country is highly dependent on the supply of fossil fuels which are constrained by its limited availability and pollution characteristics. India is among the world’s fourth-largest petroleum consumer due to which the vehicular emissions increased eight times over the last two decades. Due to the environmental awareness and depletion of fossil fuel reserves, attention has been given to find an alternative energy source. Among the alternatives existing, Biodiesel is the one which is less polluting and eco-friendly. So it can be used in industrial, commercial, agricultural and other sectors as a substitute for diesel. Biodiesel can be produced from crude vegetable oil, non-edible oil, frying oils (waste), animal tallow and algae by a process of chemical reaction called Transesterification. Biodiesel is also known as methyl or ethyl esters of the feedstock from which it is produced. It is miscible with diesel oil which allows the use of blends of petro diesel and biodiesel in any percentage. The C.I. engines fuelled with biodiesel perform more or less in the same fashion as that with the conventional fuel. Comparative to diesel, biodiesel has high Cetane number and lower compressibility. Additionally, the heat release rate of biodiesel is slightly lower than diesel owing to low calorific value, low volatility and high viscosity. The problem of high viscosity can be eradicated by transesterification process and by adding additives which help us to store the biodiesel for a longer duration of time without any decay. Exhaust emissions are significantly reduced with the use of biodiesel or its blends. The present paper investigates the potential of Mahua (Madhuca Indica) oil for biodiesel production as it can be extracted from seeds of Mahua tree which are indigenous to India. It can grow even in dry regions and are found abundantly in several parts of India