The present work aimed at the standardization of transesterification process parameters for the production of methyl ester of filtered neem oil and fuel characterization for engine performance. The effect of process parameters such as molar ratio, preheating temperature, catalyst concentration and reaction time was studied to standardize the transesterification process for estimating the highest recovery of ester with lowest possible viscosity. Based on the observations of the ester recovery and kinematic viscosity, it was found that filtered neem oil at 6:1 M ratio (methanol to oil) preheated at 55 degrees C temperature and maintaining 60 degrees C reaction temperature for 60 min in the presence of 2 percent KOH and then allowed to settle for 24 h in order to get lowest kinematic viscosity (2.7 cSt) with ester recovery (83.36%). Different fuel properties of the neem methyl ester and neem oil were also measured. Results show that the methyl ester of neem obtained under the optimum condition is an excellent substitute for fossil fuels. (C) 2010 Elsevier Ltd. All rights reserved.