The use of recently developed genetic engineering tools in combination with organisms that have the potential to produce precursors for the production of biodiesel, promises a sustainable and environment friendly energy source. Enhanced lipid production in wild type and/or genetically engineered organisms can offer sufficient raw material for industrial transesterification of plant-based triglycerides. Bio-diesel, produced with the help of genetically modified organisms, might be one of the best alternatives to fossil fuels and to mitigate various environmental hazards.