The world energy sources are depleting day by day due to declining fossil fuel reserves, global climate changes and government regulation regarding Green House Gases. More over the use of fossil fuel is not enough to meet the increasing energy requirements of the growing population of the world so the alternate and renewable fuel sources available nowadays are becoming more and more important. Although there are a number of different fuel sources available but Bio-Diesel is the most feasible for countries like Pakistan, as it is an agricultural country and possesses suitable climatic and Geographical conditions. The objective of this study is to understand the construction of the bio-diesel plant and all the mechanical challenges involved in it to make it efficient and commercial, also to understand the chemical processes involved in it. The control, operation and working of the plant are also given priority in the objective. The cost of the Bio-Diesel is the issue related to it commercialization, Adoption of continuous transesterification process and recovery of high quality glycerol (by product) are the primary parameters to be considered to lower the cost of Bio-Diesel. The produced Bio-Diesel is also analyzed after the production, to make sure that the Bio-Diesel produced is of the required quality or not. This study consists of all of these processes involved in bio-diesel production along with the benefits that comes with its use, now and in the near future.