The depletion of non-renewable fossil fuels and a surge in their prices have led researchers to seek alternative, renewable energy sources; among them, biodiesel is a good option, especially in the ever-growing global transport sector. Mustard oil is a potential feedstock for biodiesel production, and because it is non-edible it avoids the food versus fuel feud. Biocatalytic transesterification of mustard oil for biodiesel production makes this process cost efficient, environmentally friendly and sustainable. In the current study, Pseudomanas aeruginosa Q8 KX12304-mediated transesterification of mustard oil was carried out. The parameters for the transesterification reaction were statistically optimized using Plackett–Burman and central composite design. The highest biodiesel volumetric yield obtained was 100% at optimized conditions. The quality of biodiesel was confirmed using gas chromatography–mass spectrometry (GCMS) and the produced biodiesel was found to meet the quality standards specified by American Society for Testing and Materials (ASTM) and EU-14103. The fatty acid methyl ester contents of the biodiesel produced were erucic acid methyl esters (48.2%), palmitic acid methyl esters (11.8%), oleic acid methyl esters (10.6%), linolenic acid methyl esters (10.3%), linoleic acid methyl esters (9.1%) and stearic acid methyl esters (8%). To the best of our knowledge, this is the first study to report transesterification of mustard oil via biocatalysis.