Direct acid methylation was examined as a means for both analysis of fatty acid content in microalgal cells and biodiesel production without pretreatment. Microalgal cells of Chlamydomonas reinhardtii and Dunaliella tertiolecta were prepared and examined. It appeared that direct acid methylation extracted higher fatty acid content than the solvent-based Soxhlet extraction process. It also revealed that the latter was prone to extract a significant amount of nonlipid hydrophobic impurities, including hydrophobic proteins and phytol-type compounds, while direct methylation produces essentially pure ester product. This work demonstrates that direct acid methylation provides superior fatty acid extraction, promising an efficient process for either quantification of lipid content or production of biodiesel.