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The rapid depletion of conventional fuel reserves and the increase in environmental pollution prompted the search for a sustainable energy solution. Biodiesel is one of the most promising energy substitutes with similar properties as conventional diesel fuel. Surplus availability of palm oil makes it suitable for biodiesel production. Due to the lack of availability of review articles that cover the entire process of palm biodiesel production and its optimum use in diesel engines, the authors were motivated to write this article. Cultivation parameters of palm trees, extraction of oil, and physicochemical properties of palm oil–based biodiesel are explained in this review. The production of palm biodiesel from raw oil can be done through pyrolysis, micro-emulsification, blending, hydro-esterification, and transesterification processes. For high biodiesel yield and less cost of operation, the transesterification method is adopted. The performance and emission parameters of diesel engines that operated on palm biodiesel and its blends are also explained. There is a decrease in brake thermal efficiency and an increase in brake-specific fuel consumption observed with the use of palm biodiesel in diesel engines. A reduction in CO and HC emissions and an increase in NOx emissions are found due to the oxygenating nature of palm biodiesel. This article provides the scientific approach to find out the optimum parameters for palm biodiesel production and its efficient use in compression ignition engines. [ABSTRACT FROM AUTHOR]