The excessive utilization of petroleum resources leads to global warming, crude oil price fluctuations, and the fast depletion of petroleum reserves. Biodiesel has gained importance over the last few years as a clean, sustainable, and renewable energy source. This review provides knowledge of biodiesel production via transesterification/esterification using different catalysts, their prospects, and their challenges. The intensive research on homogeneous chemical catalysts points to the challenges in using high free fatty acids containing oils, such as waste cooking oils and animal fats. The problems faced are soap formation and the difficulty in product separation. On the other hand, heterogeneous catalysts are more preferable in biodiesel synthesis due to their ease of separation and reusability. However, in-depth studies show the limited activity and selectivity issues. Using biomass waste-based catalysts can reduce the biodiesel production cost as the materials are readily available and cheap. The use of an enzymatic approach has gained precedence in recent times. Additionally, immobilization of these enzymes has also improved the statistics because of their excellent functional properties like easy separation and reusability. However, free/liquid lipases are also growing faster due to better mass transfer with reactants. Biocatalysts are exceptional in good selectivity and mild operational conditions, but attractive features are veiled with the operational costs. Nanocatalysts play a vital role in heterogeneous catalysis and lipase immobilization due to their excellent selectivity, reactivity, faster reaction rates owing to their higher surface area, and easy recovery from the products and reuse for several cycles.