Biofuel is any fuel that derives from biomass — recently living organisms or their metabolic byproducts, such as manure from cows. It is a renewable energy source, unlike other natural resources such as petroleum, coal and nuclear fuels.

Agricultural products specifically grown for use as biofuels include corn and soybeans, primarily in the United States, as well as flaxseed and rapeseed, primarily in Europe. Waste from industry, agriculture, forestry, and households can also be used to produce bioenergy; examples include straw, lumber, manure, sewage, garbage and food leftovers. Most biofuel is burned to release its stored chemical energy. The largest advantage of biofuel in comparison to most other fueltypes is that the energy within the biomass can be stored for an indefinite time-period and without any danger.

Biomass can be used both for central- and decentralized production of electricity and heat. As of 2005, bioenergy covers approximately 15% of the world's energy consumption. Most bioenergy is consumed in developing countries and is used for direct heating, as opposed to electricity production. However, Sweden and Finland supply 17% and 19% respectively, of their energy needs with bioenergy, a high figure for industrialized countries.

The production of biofuels to replace oil and natural gas is in active development, focusing on the use of cheap organic matter (usually cellulose, agricultural and sewage waste) in the efficient production of liquid and gas biofuels which yield high net energy gain. The carbon in biofuels was recently extracted from atmospheric carbon dioxide by growing plants, so burning it does not result in a net increase of carbon dioxide in the Earth's atmosphere. As a result, biofuels are seen by many as a way to reduce the amount of carbon dioxide released into the atmosphere by using them to replace non-renewable sources of energy. Noticeable is the fact that the quality of timber or grassy biomass does not have a direct impact on its value as an energy-source.

Dried compressed peat is also sometimes considered a biofuel. However it does not meet the criteria of being a renewable form of energy, or of the carbon being recently absorbed from atmospheric carbon dioxide by growing plants. Though more recent than petroleum or coal, on the time scale of human industrialisation it is a fossil fuel and burning it does contribute to atmospheric CO2.