Indicators of the environmental sustainability of biofuel production, distribution, and use should be selected, measured, and interpreted with respect to the context in which they are used. The context of a sustainability assessment includes the purpose, the particular biofuel production and distribution system, policy conditions, stakeholder values, location, temporal influences, spatial scale, baselines, and reference scenarios. We recommend that biofuel sustainability questions be formulated with respect to the context, that appropriate indicators of environmental sustainability be developed or selected from more generic suites, and that decision makers consider context in ascribing meaning to indicators. In addition, considerations such as technical objectives, varying values and perspectives of stakeholder groups, indicator cost, and availability and reliability of data need to be understood and considered. Sustainability indicators for biofuels are most useful if adequate historical data are available, information can be collected at appropriate spatial and temporal scales, organizations are committed to use indicator information in the decision-making process, and indicators can effectively guide behavior toward more sustainable practices.