A nano-alumina-zirconia composite catalyst has been synthesized by a simple aqueous sol-gel method using AlCl3 center dot 6H(2)O and ZrCl4 as precursors. Thermal decomposition of the precursor and subsequent formation of gamma-Al2O3 and t-ZrO2 have been investigated by thermal analysis. XRD analysis show that gamma-Al2O3 and t-ZrO2 phases are formed at 700 degrees C. FT-IR analysis also indicate the phase transition to gamma-Al2O3 occur in corroboration with X-ray studies. TEM analysis of the calcined powder reveal that spherical particles were in the range of 8-12 nm. The nano alumina-zirconia composite particles are mesoporous and uniformly distributed in their crystalline phase. In order to measure the catalytic activity, esterification reaction has been carried out. Biodiesel, as a renewable fuel, is formed in a continuous packed column reactor. Free fatty acid (FFA) is esterified with ethanol in a heterogeneous catalytic reactor. It is found that the synthesized gamma-Al2O3/ZrO2 composite has the potential to be used as a heterogeneous base catalyst for biodiesel production processes.