Interest in biodiesel production has increased with increases in the cost of petroleum diesel and with increased awareness of global warming. In order to evaluate the cost of production in a small-scale production system, a study was conducted considering costs from planting an oilseed crop (canola) to processing the oil into biodiesel fuel. In a pilot run, 17.5 tons of canola, produced from two farms in northern Maine, were crushed and most of the oil used to produce biodiesel. Under optimum conditions, one ton of canola oil produced 1260 lbs of meal and 88 gallons of oil in this study. The cost of canola cultivation and storage was estimated to be $241 a ton under conventional management. The cost of mechanically extracting the oil was estimated to be $52.67 a ton. Assuming the seed meal has a value of $150 a ton and subtracting this from the costs noted above, yielded a cost of $2.31 a gallon for canola oil. After processing this into biodiesel, there was an estimated breakeven cost of $3.24 a gallon for biodiesel in this system. The profitability of small-scale production obviously depends both on current canola and petroleum prices, and the level and accessibility of government support for biodiesel.