Abstract The catalyst-free two-step process has been developed for biodiesel production using low-grade feedstocks. The first step consists of triglycerides hydrolysis under subcritical water conditions to generate and increase free fatty acid (FFA) content for ethyl ester production. In its subcritical state, water can be used as both a solvent and a reactant for the hydrolysis of triglycerides. The hydrolyzed product mixture is separated by decantation into the oil phase of FFA (upper layer) and a water phase that contains glycerol (lower layer). In the second step, the hydrolyzed products of free fatty acids were successfully esterified to their ethyl ester in supercritical ethanol conditions without any catalyst. Under the sub- and supercritical conditions of water and ethanol, the hydrolysis and the esterification reactions proceed quickly, with a conversion of greater than 98 % after 10−20 min. This two-step process for biodiesel production offers several advantages, such as milder reaction conditions and pollution reduction due to the use of water instead of organic solvents. Also, the glycerol is removed after the hydrolysis reaction so that the backward reaction between the glycerol and the ethyl ester disappears, and lead to the biodiesel yield and quality improvement. The aim of this study is making a comparison between our previous one-step process and the two-step reaction process to find the best pathway for designing and building an integrated reactor. Indeed, the two-step process is more applicable for low-grade feedstocks with a high amount of FFA and water.