The growing global demand for energy with expected fossil fuel shortages accompanied with high fossil energy consumption and its adverse impact of environment and climate change stresses the search for alternative energy resources. However, biofuel energy offers many opportunities but poses a number of risks and tradeoffs that result in the shortage of food supply to the poor and increase, at the same time, food prices and food insecurity. The diversion of land by food staples to fuel increases food prices and reduced food availability worldwide. The main objective of this study is to assess the status of liquid biofuel production and processing in the Arab Region, to identify multiple effects of biofuel production and to identify the opportunities and challenges stemming from emerging biofuel industry for smallholder producers in the Arab Region countries. Primary information has been collected from stakeholders through questionnaires, rapid appraisal and field visits. Several Arab countries are using biomass from farms, processing residues and livestock manure. The other group is trying to grow fuel plants like Jatropha, such Saudi Arabia, Egypt and Jordan. The positive and negative impacts, in general, were briefly discussed, which in turn reflected the impact of biofuel production on economic and socio-economic. In conclusion, biofuels bring challenges and risks, including potential land-use conflicts, environmental risks, and heightened concerns about food security. These challenges and risks can be effectively dealt with through governmental policies. Key words: Biofuel, socioeconomic, food security, environmental impact.