Biodiesel (fatty acid methyl ester) is a nontoxic and biodegradable alternative fuel that is obtained from renewable sources. A major hurdle in the commercialization of biodiesel from virgin oil, in comparison to petroleum-based diesel fuel, is its cost of manufacturing, primarily the raw material cost. Used cooking oil is one of the economical sources for biodiesel production. However, the products formed during frying, such as free fatty acid and some polymerized triglycerides, can affect the transesterification reaction and the biodiesel properties. Apart from this phenomenon, the biodiesel obtained from waste cooking oil gives better engine performance and less emissions when tested on commercial diesel engines. The present paper attempts to review methods for the transesterification of waste cooking oil and the performance of biodiesel obtained from waste cooking oil in a commercial diesel engine. The paper also examines the basic chemistry involved during frying and the effects of the products formed in the frying process on biodiesel quality.