Iceland is to stop using palm oil in own-brand products by the end of 2018.
The Deeside-based chain - the first major UK supermarket to ban palm oil - said it was used in more than half of its products, from biscuits to soap.
Iceland said growing demand for the oil was devastating tropical rainforests across southeast Asia.
The frozen food specialist said it was alerted to the environmental challenges that palm oil presented by campaigners at Greenpeace.
The ban only applies to Iceland-brand products, meaning other products sold by the retailer may still contain palm oil.
Iceland managing director Richard Walker said there was "no such thing" as properly sustainable palm oil.
"Certified sustainable palm oil does not currently limit deforestation and it does not currently limit the growth of palm oil plantations," he told the BBC. "So until such a time as there is genuinely sustainable palm oil that contains zero deforestation, we are saying no to palm oil."
Mr Walker said the move would increase costs but they would not be passed on to customers: "There will be an extra cost but we think it's the right thing to do."