Salinity is a major abiotic stress for terrestrial plants and freshwater microalgae alike. The most notable physiological response of microalgae like Dunaliella to salinity stress is reduced photosynthesis and production of carotenoids. Here, we report isolation and characterization of a novel freshwater microalgal strain, Chlorella sorokiniana HS1, which grows and hyperaccumulates lipid droplets (LD) in hypersaline conditions greater than seawater salinity. Other freshwater Chlorella strains tested neither grew nor possessed high LD levels in high salt concentration. C. sorokiniana HS1 displayed increase in cell size (200%) and LD, resulting in increased biomass and lipid productivity, respectively, with altered but favourable fatty acid methyl ester composition under salinity stress. Experimental analyses reveal definitive shift from proteins and starch to LD synthesis as well as chlorophyll degradation, response analogous to nitrogen starvation. Acute salt stress (<6 h) in seawater salinity or above resulted in instant accumulation of LD. C. sorokiniana HS1 allows for two phase cultivation, growth phase in freshwater and stress induction phase in seawater for biodiesel production. This strain would therefore significantly reduce costs and production constraints associated with stress induction. (C) 2015 Elsevier Ltd. All rights reserved.