The increasing global demand for sustainable energy alternatives has positioned biodiesel as a promising renewable fuel source. This study presents a comprehensive modelling and optimization approach for biodiesel production from jatropha oil using advanced process simulation and statistical optimization techniques. The research employed Aspen Plus® V11 for process modelling, incorporating transesterification, methanol recovery, water washing, and purification stages. Response Surface Methodology (RSM) with a Central Composite Design was utilized to optimize three critical process parameters: transesterification temperature (40-80°C), water washing flow rate (40-60 kg/hr), and reflux ratio (0.7-1.3). The Peng–Robinson–Boston–Mathias thermodynamic model was selected to accurately represent the multi-component hydrocarbon system behaviour. The optimized process achieved a biodiesel yield of 83.09% under optimal conditions of 63°C transesterification temperature, 44 kg/hr water flow rate, and 1.1 reflux ratio. The simulation demonstrated that temperature significantly influences yield until an optimal point of 68°C is reached, beyond which methanol evaporation reduces conversion efficiency. Economic analysis revealed a minimum fuel selling price (MFSP) of $0.62/kg. Life cycle assessment using OpenLCA 2.0 and the ReCiPe 2016 methodology indicated positive environmental benefits. This integrated approach successfully demonstrates the technical and economic viability of jatropha-based biodiesel production. The optimized process parameters provide practical guidelines for industrial-scale implementation, while the comprehensive economic evaluation confirms biodiesel's competitiveness with fossil fuels. This study contributes to sustainable energy development by offering a systematic methodology for biodiesel process optimization that balances yield maximization with economic feasibility.