A technique to produce biodiesel from mahua oil (Madhuca indica) having high free fatty acids (19% FFA) has been developed. The high FFA level of mahua oil was reduced to less than 1% by a two-step pretreatment process. Each step was carried out with 0.30-0.35 v/v methanol-to-oil ratio in the presence of 1% v/v H2SO4 as an acid catalyst in 1-hour reaction at 60 degrees C. After the reaction, the mixture was allowed to settle for an hour and methanol-water mixture that separated at the top was removed. The second step product at the bottom was transesterified using 0.25 v/v methanol and 0.7% w/v KOH as alkaline catalyst to produce biodiesel. The fuel properties of mahua biodiesel were found to be comparable to those of diesel and conforming to both the American and European standards. (c) 2005 Elsevier Ltd. All rights reserved.