Candlenut shell is an agricultural waste which can be processed into low-cost active carbon. Activated carbon cannot be used directly as a heterogeneous catalyst in transesterification of biodiesel because of its low alkalinity, thus treatment is required. In this study, the carbonization of candlenut shells was conducted at 500°C for 4 h. The activated carbon obtained was modified by impregnation with potassium hydroxide (KOH) solution. KOH concentration used was 50g/150 ml aqua des and impregnation time was 24 h. The impregnated activated carbon was characterized by Scanning Electron Microscopy - energy dispersive spectroscopy (SEM-EDS), Fourier Transform Infrared (FTIR) spectroscopy, and was further tested as a heterogeneous catalyst for biodiesel production.