Fuel is the main factor for the economy of a country. And demand of fuel is increasing rapidly day by day. Petrol & diesel are the main fuel used in worldwide. But all of these are non-renewable sources of energy and are very harmful for our environment. Combustion of these types of fuel produces different types of toxic gases which pollute air and at the same time, sources of this type of energy are limited. So, alternative fuel must be searched to solve our energy problem and to make free our environment from pollution. For these reasons, i proposed a method for producing biodiesel from vegetable oil which is environment friendly and quality was also tested. Though the price of biodiesel will be greater than that of fossil fuel but for large scale production it will be less. If we can increase the production of vegetable oil in our country in large scale then production of biodiesel will save our foreign currency which is used for importing fuel from other countries. And it will be helpful to solve our energy demand. So, I tried my best to make the process economical and easy, so that everybody can produce in their home.