Experimental determination of the separate effects of palm oil and methanol concentrations on the rate of their enzymatic transesterification was used to propose suitable mechanismic steps and to test the generated kinetic model. The reaction took place in n-hexane organic medium and the lipase used was from Mucor miehei. At a constant methanol concentration of 300 mol m(-3), it was found that, initially as the palm oil concentration increased, the initial reaction rate increased. However, the initial rate dropped sharply at substrate concentrations larger than 3 3 1250 mol m(-3). Similar behaviour was observed for methanol concentration effect, where at a constant substrate concentration of 1000 mol m(-3) the initial rate of reaction dropped at methanol concentrations larger than 3000 mol m(-3). Ping Pong Bi Bi mechanism with inhibition by both reactants was adopted as it best explains the experimental findings. A mathematical model was developed from a proposed kinetic mechanism and was used to identify the regions where the effect of inhibition by both substrates arised. The proposed model equation is essential for predicting the rate of methanolysis of palm oil in a batch or a continuous reactor and for determining the optimal conditions for biodiesel production. (C) 2007 Elsevier Ltd. All rights reserved.