Several threats in the form of climate change, future oil supplies, and energy security have created a need for the development of large-scale alternatives to fossil fuel-based fuels. One such alternative fuel developed from bio-renewable resources, which has generated considerable interest, is biodiesel, mainly produced via the transesterification of animal fats and vegetable oils. Organic and inorganic solvents have been commonly applied to improve the efficiency of the biodiesel production process. However, because of the undesirable properties of conventional solvents such as their hazardous nature, the need for greener alternatives is apparent. Over the last decade, ionic liquids (ILs) have garnered considerable attention for both their process improvement and environmental benefits to the biodiesel production process. In this chapter, a compressive overview is provided of the versatility of ILs as solvents in both the reaction and purification steps in the biodiesel production process, acting as catalysts, co-solvents, and extracting solvents. In addition, this study explores the use of deep eutectic solvents (DESs), which are considered to be the next generation of solvents in the biodiesel production process.