The increasing reliance on fossil fuels has led to significant environmental challenges, including climate change, resource depletion, and pollution. The transition to sustainable energy systems is crucial in addressing these challenges and achieving global energy security. Advanced biofuels, derived from non-food biomass and waste, present a promising solution to these challenges by aligning with the principles of sustainable development and the circular economy. This chapter examines the potential of advanced biofuels to contribute to a sustainable energy transition by analyzing their role within the framework of sustainable development and the circular economy. The chapter highlights the role of biofuels in the sustainable energy transition, emphasizing their contributions within the frameworks of the Sustainable Development Goals (SDGs) and circular economy. Additionally, the chapter evaluates biofuels’ impact on economic growth through job creation, rural economic development, and social inclusion. A discussion of the economic foundations of biofuel production provides insights into the economic viability and systemic integration of biofuels. Key challenges such as technological limitations, policy gaps, and market constraints are critically examined, followed by an exploration of future prospects for advanced biofuel systems. Overall, this chapter serves as a comprehensive resource for understanding the multidimensional contributions of biofuels to sustainable development while addressing their challenges and pathways to a sustainable future.