Due to negative environmental influence and limited availability, petroleum derived fuels need to be replaced by
renewable biofuels. Biodiesel has attracted intensive attention as an important biofuel. Microalgae provide various potential advantages for biodiesel production when compared with ‘traditional’ crops. Specifically, large scale micro algal culture need not compete for arable land, while in theory their productivity is greater. In consequence, there has been resurgence in interest and a proliferation of algae fuel projects. However, while on a theoretical basis, microalgae may produce between 10 and 100 fold more oil per acre, such capacities have not been validated on a commercial scale. There are a series of consecutive processes for biodiesel production with microalgae as feedstock, including selection of adequate micro algal strains, mass culture, cell harvesting, oil extraction and trans esterification. To reduce the overall production cost, technology development and process optimization are necessary. Genetic engineering also plays an important role in manipulating lipid biosynthesis in microalgae. Many approaches, such as sequestering carbon dioxide from industrial plants for the carbon source, using wastewater for the nutrient supply, and maximizing the values of byproducts, have shown a potential for cost reduction. This review provides a brief overview of genetic engineering of microalgae for enhanced biodiesel production.