This paper explores the economic viability of producing biofuels from Agave in Mexico and the potential for it to complement the production of tequila or mescal. We focus on Agave varieties currently being used by the tequila industry to produce two beverages, tequila and mescal, and explore the potential for biofuel production from these plants. Without competing directly with beverage production, we discuss the economic costs and benefits of converting Agave by-products to liquid fuel as an additional value-added product and expanding cultivation of Agave on available land. We find that the feedstock cost for biofuel from the Agave piña alone could be more than US$3 L−1 on average. This is considerably higher than the feedstock costs of corn ethanol and sugarcane ethanol. However, there may be potential to reduce these costs with higher conversion efficiencies or by using sugar present in other parts of the plant. The costs of cellulosic biofuels using the biomass from the entire plant could be lower depending on the conversion efficiency of biomass to fuel and the additional costs of harvesting, collecting and transporting that biomass.