Single-step supercritical transesterification and two-step biodiesel production process consisting of oil hydrolysis and subsequent supercritical methyl esterification were studied and compared. For this purpose, comparative experiments were conducted in a laboratory-scale batch reactor and optimal reaction conditions (temperature, pressure, molar ratio and time) were determined. Results indicate that in comparison to a single-step transesterification, methyl esterification (second step of the two-step process) produces higher biodiesel yields (95 wt% vs. 91 wt%) at lower temperatures (270 degrees C vs. 350 degrees C), pressures (8 MPa vs. 12 MPa) and methanol to oil molar ratios (1:20 vs. 1:42). This can be explained by the fact that the reaction system consisting of free fatty acid (FFA) and methanol achieves supercritical condition at milder reaction conditions. Furthermore, the dissolved FFA increases the acidity of supercritical methanol and acts as an acid catalyst that increases the reaction rate. There is a direct correlation between FFA content of the product obtained in hydrolysis and biodiesel yields in methyl esterification. Therefore, the reaction parameters of hydrolysis were optimized to yield the highest FFA content at 12 MPa, 250 degrees C and 1:20 oil to water molar ratio. Results of direct material and energy costs comparison suggest that the process based on the two-step reaction has the potential to be cost-competitive with the process based on single-step supercritical transesterification. Higher biodiesel yields, similar or lower energy and methanol consumption per unit of biodiesel, and higher market value of the glycerol obtained in the two-step process explain this observation. (C) 2016 Elsevier Ltd. All rights reserved.