In view of escalating concerns about energy (fuel) supply and environmental degradation, biodiesel is viewed as a potential replacement for petro-diesel, thereby reducing the dependences of many nations on importing crude petroleum. Cashew nut shell liquid (CNSL) is a biofuel that is renewable and biodegradable and has similar properties of petro-diesel fuel. In the present paper, the status of CNSL is reviewed in order to provide an updated source of information on CNSL and its use for researchers, engineers, and policy makers. The paper summarizes information on cashew crop cultivation, oil extraction methods, and fuel modification techniques. Furthermore, the combustion behavior and emission characteristics of CNSL in a compression ignition engine are discussed. It is concluded that CNSL has the potential to be used as an alternative to diesel fuel in compression ignition engines, and thereby mitigate challenges associated with high dependences on imported petroleum and environmental impact that is due to the emissions of greenhouse gases and other pollutants.