Subcritical water can act as an effective catalyst for hydrolysis or biodegradation reactions and to increase the extractable neutral lipids from activated sludge. Under subcritical state, water can be used as both a solvent and reactant for the hydrolysis of triglycerides. It seems that under subcritical condition water dissociates into H+ and OH− ions and acts as a Lewis acid which then facilitates both the dissociation of biomolecules in biomass and the transesterification reaction. At 175 °C (the reaction temperature used in this study), the vapor pressures of methanol and water are 23.7 bar and 8.9 bar, respectively. In this study, when temperature was raised to 175 °C, the pressure inside the reactor was about 23 bar. Hence most water remained in liquid state.