In the present study, non-catalytic supercritical methanol (SCM) reaction was utilized to produce biodiesel from palm oil. The effects of free fatty acids and water content on the yield of biodiesel were investigated and subsequently compared with conventional catalytic reaction. In addition, the feasibility of utilizing co-solvent to reduce the operating conditions needed in SCM was carried out as well. Results show that catalytic reaction suffers from low yield with the presence of high water content in oil. On the other hand, the yield of SCM reaction was found to increase with the increment of water content in the reaction mixture. Hence, SCM has been shown to have a high tolerance for water content in oil, which is important in order to utilize other sources of triglycerides such as waste oil. On the other hand, non-polar solvent such as heptane was found to have potential to decrease the temperature required in the reaction. (C) 2010 Elsevier B.V. All rights reserved.