The European transport sector was responsible for more than 25% of the EU total greenhouse gas (GHG) emissions in 2017. 53% of these emissions came from the passenger cars and light-commercial vehicles segments. Biofuels are seen as one of the options to limit these emissions in Europe. To understand the recent evolution of biofuels and their future, this review gives an overview on the production, use, legislation, and environmental impacts of biofuels in Europe for light-duty vehicles. In 2017, biofuels made up 4.5% of the energy consumption in the road transport and non-road mobile machinery. Biodiesel in 2018 accounted for 62% of the biofuels consumed in the EU, followed by bioethanol (17.5%), HVO (16.6%), upgraded biogas (1.7%) and bio-ETBE (1.1%). A review of 86 LCA studies published between 2013 and 2020 indicated that the climate change impact of biofuels is generally lower than diesel and petrol, with average emission savings depending on the type of biofuel: 70% for biohydrogen, 63% for upgraded biogas, 41% for pure biodiesel, between 54% and 7% for bioethanol (depending on the blend percentage, between 100% and 10%). An important issue identified is the limited consideration of the land use change effects, which are rarely assessed and are of paramount importance, as the values found in this review were as high as 231 g CO2eq/MJ in some cases and thus non-negligible. Biofuels perform generally similarly or worse than fossil fuels for most of the non-GHG-related impact categories, except for ozone, fossil resource and abiotic depletion. Currently, it is highly recommended to move towards non-edible feedstocks, waste and by-products which guarantee a lower risk of land use change. The European legislation, through the Directive 2018/2001 and the regulation 2019/807, is pushing in that direction.