The global shortages of fossil fuels, significant increase in the price of crude oil, and increased environmental concerns have stimulated the rapid growth in biodiesel production. Biodiesel is generally produced through transesterification reaction catalyzed either chemically or enzymatically. Enzymatic transesterification draws high attention because that process shows certain advantages over the chemical catalysis of transesterification and it is "greener." This paper reviews the current status of biodiesel production with lipase-biocatalysis approach, including sources of lipases, kinetics, and reaction mechanism of biodiesel production using lipases, and lipase immobilization techniques. Factors affecting biodiesel production and economic feasibility of biodiesel production using lipases are also covered.