The use of palm oil as a biofuel has been heavily debated for its land-use conflict with nature and its competition with food production, being the number one cooking oil worldwide. In that context, we present a life cycle assessment of a palm oil production process yielding both biodiesel and cooking oil, incorporating the land-use impact and evaluating the effect of treating the palm oil mill effluent (POME) prior to disposal. The results show that the nonrenewable energy requirement, global warming potential (GWP; exclusive land-use change), and acidification potential are lower than those of the fossil alternative. However, the system triggers an increase in eutrophication potential (EP) compared to the fossil fuel reference. This system shows less energy requirement, global warming and acidification reduction, and less eutrophication increase compared to the reference than the same system converting all palm oil into biodiesel (no cooking oil production). The land occupation of palm oil triggers ecosystem quality (EQ) loss of 30−45% compared to the potential natural vegetation. Furthermore, such land-use change triggers a carbon debt neutralizing the GWP reduction for 45−53 years. The POME treatment scenarios reveal a trade-off between GWP and EP.