Till now, most part of the biodiesel is produced from the refined vegetable oils using methanol as feedstock in the presence of an alkali catalyst. However, large amount of waste edible oils and grease are available. The difficulty with alkali-catalyzed esterification of these oils is that they often contain large amount of free fatty acids (FFA), polymers and decomposition products. These free fatty acids can quickly react with the alkali catalyst to produce soaps that inhibit the separation of the ester and glycerine. An esterification and transesterification process is developed to convert the high FFA oil to its monoesters. The first step, the acidcatalyzed esterification with glycerine and these FFA reduces the FFA content of the oil and grease to less than3%, and then an azeotropic distillation solvent is used to remove the water. The major factors affecting the conversion efficiency of the process such as glycerol to free fatty acid molar ratio, catalyst amount, reaction temperature and reaction duration are analyzed. The second step, alkali-catalyzed transesterification process converts the products of the first step to its monoesters and glycerol, and then the glycerol is recycled for utilization in the first step. Technical indicators of the biodiesel product can meet the ASTM 6751 standard.