This article is a literature review of use of biodiesel fuel for compression ignition engines. This study is based on the reports of about 50 scientists including (some manufacturers and agencies) who published their results between 1900 and 2005. The scientists and researchers conducted the test, using different types of raw and refined oils. These experiments with raw biodiesel as fuel did not show the satisfactory results, when they used the raw biodiesel. The fuel showed injector coking and piston ring sticking. Some of the scientists mixed with methanol or ethanol in presence of KOH or NaOH and then filtered and washed. The process is called transeterfication and is used to degum, dewax and to remove triglycerides from the vegetable oils. Transeterfication decreases the viscosity, density and flash point of the fuel. The results obtained, by using such oils in compression ignition engines as fuel, were satisfactory only for short term. A vast majority of scientists mixed the transesterified biodiesel oil with diesel with different ratios. When tested in long run, blends of the oil above 20% (B20) caused maintenance problems and even sometimes damaged the engine. Some authors reported success in using vegetable oils as diesel fuel extenders in blends of more than 20% even in long-term studies. The main conclusion derived by the researchers is that coking is a potentially serious problem with the use of unmodified vegetable biodiesel. However, the refined, chemically processed and degumed vegetable oil mixed with diesel can be used to run compression ignition engine for longer duration. It was reported that there was a slight decrease in brake power and a slight increase in fuel consumption. However, the lubricant properties of the biodiesel are better than diesel, which can help to increase the engine life. Moreover, the biodiesel fuel is environment friendly, produces much less NOx and HC and absolutely no Sox and no increase in CO2 at global level.