In this study, Japanese Industrial Standard diesel no 2 and waste cooking oil biodiesel fuels are compared in terms of environmental pollution cost analysis. The experiments of the diesel and biodiesel fueled diesel engine are done at 100 Nm, 200 Nm and full load (294 Nm), while engine speed is constant at 1800 rpm. The method used in this study consists of a combination of economic and environmental parameters. According to the analyses, the total environmental pollution cost of the biodiesel is higher than the diesel fuel. On the other hand, the total cost of the CO₂ emissions of the diesel fuel is generally found to be higher than biodiesel fuel in terms of the life cycle based environmental pollution cost. The specific environmental pollution cost is found as minimum at full load to be 2.217 US cent/kWh for the diesel fuel and 2.449 US cent/kWh for the biodiesel fuel at full load. On the other hand, the life cycle based specific environmental pollution cost is determined as minimum at full load to be 5.050 US cent/kWh for the diesel fuel and 5.309 US cent/kWh for the biodiesel fuel. The biodiesel fuel has higher values than diesel fuel in terms of the specific environmental pollution cost rates. The maximum total carbon dioxide emission rate is found as 0.2405 × 10⁻³ kg/kJ for the biodiesel fuel at 100 Nm engine torque and the minimum one is obtained as 0.1884 × 10⁻³ kg/kJ for the diesel fuel at full load. When the payback periods of the fuels are examined, biodiesel has longer period than diesel. The environmental payback period and life cycle based environmental payback period are also compared for fuels. In this context, the biodiesel has longer environmental payback periods rates than diesel. Consequently, the biodiesel fueled engine has higher environmental pollution cost rates than the diesel fueled engine, while the total carbon dioxide parameter of the diesel fuel is close to the biodiesel fuel’s rate. Also, all of the other environmental parameters of diesel fuel is generally better than biodiesel. Consequently, the diesel fuel is generally better option than the biodiesel considering environmental aspects. For better environmental management, the diesel fuel utilization in the diesel engine is slightly better option than biodiesel fuel in terms of environmental pollution cost analysis.