The development of alternative liquid fuels, such as bio-hydrogenated diesel (BHD), is becoming increasingly important to reduce fossil fuel consumption. In addition, BHD components (such as hexadecane) can be used as a solvent to simplify product separation for the first time. This paper demonstrated the influence of several parameters—temperature (250, 200, 350 ◦C), pressure (10, 20, 30 bar), and reactant-to-solvent ratio (1:0, 1:0.5, 1:1)—for BHD production using palmitic acid as the reactant and hexadecane as the solvent with a nickel-on-zirconia catalyst. Response surface methodology was used to determine the optimum conditions for responses (palmitic acid conversion, BHD selectivity, and yield). A set of experiments was established based on a Box-Behnken designs. The results showed that the most significant parameter for palmitic acid conversion and BHD yield was temperature, especially when higher than 300 ◦C, where the BHD yield increased from 45 % to 80 %. Overall, the optimum operating conditions were 350 ◦C, 17 bar, and a reactant-to-solvent ratio of 1:0.77, revealing the potential for further use of BHD products as solvent. Deoxygenation of palm fatty acid with hexadecane as solvent found highest conversion of 82.7 % and BHD selectivity of 84.38 % at reaction time 4 h.