Biodiesel production from soybean oil can play an important role as an alternative source of energy for automobile applications. In this paper an attempt has been made to generate biodiesel from soybean oil using transesterification and three step method. The kinetics of transesterification reaction heterogeneously catalyzed by calcium oxide was studied in order to understand the reaction mechanism of the system. The three step method comprises with saponification of oil, acidification of the soap and finally esterification of free fatty acid (FFA). Both the techniques go through a number of parameters like reaction conditions, catalyst selection, reaction time, temperature and molar ratio of oil to intermediate products and additives required to be optimized. The results showed that transesterification reaction obeyed pseudo first-order kinetics with a reaction rate constant k=0.023 min.−1 for 5 wt.% CaO and yield obtained ∼95% within 120 min with a viscosity of 4.10 mm2/s. In the three step method, conversion of biodiesel was found ∼98% with molar ratio of methanol to FFA 5∶1. Conversion of soybean oil into its subsequent biodiesel was verified and the results are comparable to commercial diesel. Consequently, biodiesel from this potential source can be a suitable pathway to commit our present and future fuel demand in the world.