All production begins by transforming the olive fruit into olive paste. This paste is then malaxed (slowly churned or mixed) to allow the microscopic oil droplets to concentrate. The oil is extracted by means of pressure (traditional method) or centrifugation (modern method). After extraction the remnant solid substance, called pomace, still contains a small quantity of oil.

The grades of oil extracted from the olive fruit can be classified as:

• Virgin means the oil was produced by the use of physical means and no chemical treatment. The term virgin oil referring to production is different from Virgin Oil on a retail label (see next section).
• Refined means that the oil has been chemically treated to neutralize strong tastes (characterized as defects) and neutralize the acid content (free fatty acids). Refined oil is commonly regarded as lower quality than virgin oil; oils with the retail labels extra-virgin olive oil and virgin olive oil cannot contain any refined oil.
• Olive pomace oil means oil extracted from the pomace using solvents, mostly hexane, and by heat.

Quantitative analysis can determine the oil’s acidity, defined as the percent, measured by weight, of free oleic acid it contains. This is a measure of the oil’s chemical degradation; as the oil degrades, more fatty acids are freed from the glycerides, increasing the level of free acidity and thereby increasing rancidity. Another measure of the oil’s chemical degradation is the organic peroxide level, which measures the degree to which the oil is oxidized, another cause of rancidity.

To classify it by taste, olive oil is subjectively judged by a panel of professional tasters in a blind taste test. This is also called its organoleptic quality.