Biodiesel and valuable free lutein were demonstrated to be simultaneously produced from Chlorella vulgaris lipid extracts. The alkali catalyst used in the transesterification of triglycerides acted as a reactant in converting lutein fatty acid esters to free lutein. A maximum biodiesel yield of 33.6% by weight of the algal lipids was obtained after a 4-h reaction with MeOH at the MeOH/biomass ratio of 16:1 using 6% alkali catalyst. The excess of alkali and MeOH employed in the production of biodiesel ensured the complete saponification of all lutein fatty acid esters to free lutein, giving a maximum yield of 2.3% by weight of the algal lipids. In addition, a process for the separation of the biodiesel and free lutein products from the reaction mixture is proposed. Finally, a preliminary economic assessment was conducted, the results of which suggest that the process for the simultaneous production of biodiesel and lutein from C.vulgaris may be economically feasible.