Micro-organisms such as bacteria (Bacillus), yeasts, molds and algae that can accumulate lipid more than 20% of their biomass are called oleaginous microorganisms. Microbial lipid has similarity with the plant's oil in type and composition. Lipid accumulation in oleaginous micro-organisms occurs with starvation of the cell in nitrogen or other nutrients except carbon, such as phosphorus, zinc, iron and magnesium. Lipid body's formation starts at the end of logarithmic phase and continues during station phase until carbon source begins to reduce. Microbial oil has potential for application in biodiesel production because of their similarity to plant's oil in composition and structure of fatty acids. The main effort is biodiesel production from low cost substrats. At the current time rice straw and corn stalk are burned in farms and increase air pollution, affect on public health and waste energy sources. If biodiesel can be produced from plant and forestry residues, have environmental benefits beyond economical benefits. Generally there are three steps for production of microbial oil and ultimately use of this oil as the substrate for biodiesel production and other products. These steps are: 1- screening of oleaginous micro-organisms with high potential of lipid production. 2- increasing of lipid content by optimizing environmental parameters and also using mutation. 3- application of byproducts for lipid production. This review is covering different researches about single cell oil production by oleaginous yeasts, different parameters which affect optimized production and also potential of this oil for biodiesel production. (C) 2017 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.