Abstract：The proposed biorefinery produces biodiesel from vegetable oils as the major products through transesterification with methyl alcohol, and simultaneously produces glycerine. Both the biodiesel and glycerine can be further processed into commodity and biodegradable fine chemicals. In this paper, the importance of such biorefinery in China is firstly discussed from reducing petroleum import, protecting environment and increasing employment opportunities, and then current rapidly growth of biodiesel in the world due to roaring crude price is introduced. The key issue in developing biorefinery is the supply of vegetable oil raw materials, particularly their prices. And finally the opportunities and challenges are discussed.