Thevetia peruviana (Yellow Oleander) seed oil was extracted with n-hexane in a soxhlet extractor. The ethanolysis and methanolysis of the oil were carried out with 50% of potassium hydroxide in ethanol and methanol respectively by weight of oil, as catalyst. The biodiesel was tested for biodegradability using E. coli. The percentage yield of the FAEE and FAME were 84.8% and 91.6% respectively. The biodegradability values of 81.4% and 86.2% were obtained for FAEE and FAME respectively after a period of 28 days. Other fuel quality parameters determined are the cetane index of 47.19 (FAEE) and 58.97 (FAME), flash point of $198^{circ}C$ (FAEE) and $175^{circ}C$ (FAME), kinematic viscosity at $40^{circ}C$ of 5.21 $mm^2s^{-1}$ (FAEE) and 5.10 $mm^2s^{-1}$(FAME), pour point of $4^{circ}C$ (FAEE) and $-2^{circ}C$ (FAME) and a cloud point of $6^{circ}C$ (FAEE) and $3^{circ}C$ (FAME). Thus, Thevetia peruviana oil has a high potential for use in production of environmentally friendly biodiesel.