In recent years, environmental problems caused by the use of fossil fuels and the depletion of petroleum reserves have driven the world to adopt biodiesel as an alternative energy source to replace conventional petroleum-derived fuels because of biodiesel's clean and renewable nature. Biodiesel is conventionally produced in homogeneous, heterogeneous, and enzymatic catalysed processes, as well as by supercritical technology. All of these processes have their own limitations, such as wastewater generation and high energy consumption. In this context, the membrane reactor appears to be the perfect candidate to produce biodiesel because of its ability to overcome the limitations encountered by conventional production methods. Thus, the aim of this paper is to review the production of biodiesel with a membrane reactor by examining the fundamental concepts of the membrane reactor, its operating principles and the combination of membrane and catalyst in the catalytic membrane. In addition, the potential of functionalised carbon nanotubes to serve as catalysts while being incorporated into the membrane for transesterification is discussed. Furthermore, this paper will also discuss the effects of process parameters for transesterification in a membrane reactor and the advantages offered by membrane reactors for biodiesel production. This discussion is followed by some limitations faced in membrane technology. Nevertheless, based on the findings presented in this review, it is clear that the membrane reactor has the potential to be a breakthrough technology for the biodiesel industry.