The biodiesel industry in the United States has grown significantly in recent years. Production increased from 25 million gallons in 2004 to an estimated 250 million gallons in 2006, and many new plants are being built. Most biodiesel in the United States is produced from soybean oil, but canola offers characteristics which make it a favorable feedstock for biodiesel production. Characteristics of canola oil also make it an increasingly popular choice for human consumption. This study examines the structure of the biodiesel and canola industries. Specifically, the study describes changes in the biodiesel industry, trends in canola production in the United States and Canada, profitability and production risk for canola, the characteristics of canola oil for both human consumption and biodiesel production, the profitability of biodiesel production, and the potential to meet the demand for biodiesel production in the United States.