Biodiesel, a non-toxic and biodegradable fuel, has recently become a major source of renewable alternative fuels. Utilization of lipase as a biocatalyst to produce biodiesel has advantages over common alkaline catalysts such as mild reaction conditions, easy product separation, and use of waste cooking oil as raw material. In this study, Pseudomonas cepacia lipase immobilized onto magnetic nanoparticles (MNP) was used for biodiesel production from waste cooking oil. The optimal dosage of lipase-bound MNP was 40% (w/w of oil) and there was little difference between stepwise addition of methanol at 12 h- and 24 h-intervals. Reaction temperature, substrate molar ratio (methanol/oil), and water content (w/w of oil) were optimized using response surface methodology (RSM). The optimal reaction conditions were 44.2 °C, substrate molar ratio of 5.2, and water content of 12.5%. The predicted and experimental molar conversions of fatty acid methyl esters (FAME) were 80% and 79%, respectively.