The Mg-Zn interaction effect of KyMg1-xZn1+xO3 heterogeneous type catalyst and its performance on transesterification of palm oil have been studied using the response surface methodology and the factorial design of experiments. The catalyst was synthesized using the co-precipitation method and the activity was assessed by transesterification of palm oil into fatty acid methyl esters. The ratio of the Mg/Zn metal interaction, temperature and time of calcination were found to have positive influence on the conversion of palm oil to fatty acid methyl ester (FAME) with the effect of metal to metal ratio and temperature of calcination being more significant. The catalytic activity was found to decrease at higher calcination temperature and the catalyst type K2Mg0.34Zn1.66O3 with Mg/Zn ratio of 4.81 gave FAME content of 73% at a catalyst loading of 1.404 wt.% of oil with molar ratio of methanol to oil being 6:1 at temperature of 150 C in 6 h. A regression model was obtained to predict conversions to methyl esters as a function of metal interaction ratio, temperature of calcination and time. The observed activity of the synthesized catalyst was due to its synergetic structure and composition. (C) 2010 Elsevier B.V. All rights reserved.