The Sr–Mg basic catalysts were developed for biodiesel production through transesterification of palm oil with methanol. The evidence for synergistic effects between active Sr and Mg species was clearly demonstrated by transesterification tests over a series of Sr–Mg catalysts with varied Sr-to-Mg molar ratios. The catalyst properties were characterised by means of temperature-programmed desorption of CO2 (CO2-TPD), N2 sorption, XRD, SEM and TEM experiments. The super strong basic site was formed in Sr–Mg catalysts through a partial solid state reaction induced by thermal treatment at 600 °C. The new basic site, together with the original basic site from SrO (average basic site density=757 μmol m−2), effectively catalysed a transesterification reaction at mild conditions. Biodiesel containing 96 % methyl esters was obtained at reaction conditions of 75 min, 60 °C, 0.1 MPa, 3 wt. % catalyst loading and a methanol-to-oil ratio of 6:1, and the catalyst exhibited good reusability. Improved surface areas and porosities were also achieved compared to the unsupported SrO. Density functional theory (DFT) calculations of methylpropanoate adsorption on SrO, MgO and Sr/MgO showed that the adsorption energies of all adsorbate–surface complexes corresponded well with the experimental catalytic activity, which increased in the order MgO<SrO<Sr/MgO.