Biofuels are promising renewable energy sources and can be derived from vegetable oil feedstocks. Although solid catalysts show great promise in plant oil triglyceride transesterification to biodiesel, the identification of active sites and operating surface nanostructures created during their processing is essential for the development of efficient heterogeneous catalysts. Systematic, direct observations of dynamic MgO nanocatalysts from a magnesium hydroxide-methoxide precursor were performed under controlled calcination conditions using novel in situ aberration corrected-transmission electron microscopy at the 0.1 nm level and quantified with catalytic reactivity and physico-chemical studies. Surface structural modifications and the evolution of extended atomic scale glide defects implicate coplanar anion vacancies in active sites in the transesterification of triglycerides to biodiesel. The linear correlation between surface defect density (and therefore polarisability) and activity affords a simple means to fine tune new, energy efficient nanocatalysts for biofuel synthesis.