Zn/I-2 was found to be a practical and effective catalyst for the transesterification of soybean oil with methanol. A study for optimizing the reaction conditions such as the molar ratio of methanol to oil, the reaction time and the catalyst amount, was performed. The highest conversion of 96% was obtained under the optimum conditions. Further, the effect of free fatty acids and water in the soybean oil on the catalytic activity of the catalysts was also investigated.