Acceleration of the transesterification reaction for synthesis of biodiesel by application of ultrasound is known. This paper tries to establish the mechanism of this enhancement by discriminating between physical and chemical effects of ultrasound. Experiments with different conditions have been coupled to a bubble dynamics model. It is revealed that influence of ultrasound oil transesterification reaction is of purely physical nature. Formation of fine emulsion between oil and alcohol due to microturbulence generated by cavitation bubbles generates enormous interfacial area, which accelerates the reaction. For the power input used ill the present experiments, the temperature peak reached in transient collapse of cavitation bubble in methanol is found to be too low to produce any radical species, which call induce transesterification reaction. The yield of the reaction is found to have an optimum with respect to alcohol to oil molar ratio. This result is attributed to the difference in intensity of microturbulence produced by cavitation bubbles in oil and methanol.