The global trend towards net-zero carbon emissions from burning fuels in combustion engines alerts us to the alternative role of biodiesel. The manufacturing cost of biodiesel hinders the fast development of various types of biofuels. Feedstock cost is one of the major determining factors of biodiesel cost and thus the extent of its competitiveness in the fuel market with other available alternative fuels or fossil fuels. Some low-cost feedstocks such as high-acid oil, which is produced from the acidifying processes of soybean soapstock, frequently contain high contents of free fatty acids (FFAs) and water. Hence, those feedstocks cannot be used to produce biodiesel through strong alkaline catalyst transesterification on an industrial scale. In contrast, the water can be converted to hydroxyl radicals to enhance the formation of esters from the dissociation of the FFA in a supercritical reacting tank. Hence, cheap high-acid oils containing high amounts of water and FFAs were used to produce biodiesel through a supercritical transesterification reaction system. The engine emission characteristics of using the biodiesel produced in this study were analyzed and compared with those of commercial biodiesel and super-low sulfur diesel (SLSD). A naturally aspirated, direct-injection, four-stroke, four-cylinder marine diesel engine associated with an eddy-current dynamometer was used to carry out the engine emission measurement. In comparison with super-low sulfur diesel (SLSD), the biodiesel had lower CO2 and CO emissions and black smoke opacity but higher emissions of O2 and NOx. The higher engine speed caused lower emissions of O2 and NOx but higher CO2 emissions. The supercritical-transesterification biodiesel appeared to be a competitive alternative fuel to fossil diesel.