Production of biodiesel fuel (fatty acid methyl ester) by use of conventional method (alkaline catalyst method) requires deacidification process prior to the reaction and refining process to remove the catalyst after the reaction. These processes increase total cost required for production of biodiesel fuel. In order to solve the problem, authors recently proposed a method called superheated methanol vapor method. In a process with this method, superheated methanol vapor is continuously bubbled into the oil in the reactor vessel and reacted with triglycerides to form fatty acid methyl ester and glycerol. The fatty acid methyl ester and glycerol formed flows out of the reactor together with unreacted methanol vapor and is collected using a condenser. Reaction using the superheated methanol vapor method can be conducted at atmospheric pressure. Production of fatty acid methyl ester by use of the superheated methanol vapor method does not require refining process after the reaction because no catalyst is used in this method and fatty acid methyl ester can be separated from glycerol simply by sedimentation. The method does not require deacidification process prior to the reaction because not only triglyceride but also free fatty acid can be converted into fatty acid methyl ester by use of the method. Therefore, both initial and running costs required for biodiesel production are thought to be reduced by applying the method. In order to estimate the cost required by a process based on the superheated methanol vapor method, a demonstration plant (design productivity: 400 L/d) was constructed and its efficiency was evaluated. The plant could produce 425 L of fatty acid methyl ester in a day from used frying oil. Energy consumed in each unit of the demonstration plant was measured (electrical energy and thermal energy). Based on the energy consumption data obtained with the demonstration plant, production cost required with a practical scale plant (designed productivity: 6000 kL/y) was calculated. The cost required by the practical scale plant with the superheated methanol vapor method was estimated to be 40.2 yen/L (about 40 cent/L) while the cost required by a plant with the alkaline catalyst method was 62.5 yen/L (about 62 cent/L). The estimated cost includes depreciation cost, cost of repairing, labor cost, methanol cost and energy cost (heat and electricity). Most of the energy consumed by the plant was thermal energy and the plant could be automatically controlled. Therefore, required cost will be further decreased by installing the plant next to an incineration facility because thermal energy can be supplied from the facility and the labor cost can also be supported by the facility.