The deterioration of fossil fuel supplies, combined with growing environmental concerns about fossil fuel extraction and consumption, has prompted worldwide communities to focus on renewable energy. Biodiesel production from various biomass feedstock is identified as an environmentally friendly and sustainable alternative. The application of nanomaterials as catalysts in the synthesis of biodiesel has enhanced the yield due to the selectivity. This review article is focused on the applications of potential nanoparticles in biodiesel production and their mechanism of action. The effect of operating variables, namely nanomaterial type, concentration, temperature, methanol to oil ratio, and water content on biodiesel production have been summarized. Under microwave-assisted transesterification, both sodium hydroxide and strontium oxide catalysts, produced highest yield (99%). For calcium oxide nanocatalyst, the highest biodiesel conversion obtained was 98.2% through microwave-assisted transesterification method of waste cooking oil. The optimal conditions for such a high conversion yield were methanol to oil ratio, reaction temperature, time, and catalyst loading of, 1:8, 65 °C, 76 mins, and 4 wt% respectively. The maximum biodiesel conversion yield achieved using KOH nanocatalyst was 96.44% in a microwave-assisted transesterification of waste cotton-seed cooking oil, at optimum conditions of 9.6 min, 0.65 wt% catalyst loading, and 7:1 methanol: oil ratio, respectively. Future perspectives on nanocatalysis for biodiesel production are explained.