Comprehensive utilization of the mixture of oil sediments (OS) and soapstock (SS) for producing FAME and phosphatides was investigated. A process consisting of three steps was employed for obtaining high conversion and by-product. In the first step, the OS-SS mixture was extracted with ethyl ether and the mixture was divided into three phases. The organic top phase contained triglycerides and phosphatides was extracted with cooled acetone and the acetone insoluble (phosphatides) was obtained. At the same time, triglycerides were separated also. In the second step, soap phase was then acidified with sulfuric acid to yield fatty acid. This "high-acid" acid oil was efficiently converted to methyl esters by acid-catalyzed esterification. The esterification reaction has been carried out with 5:1 methanol/oil (mol/mol) in the presence 3% H2SO4 (wt.%) as an acid catalyst at 85 C for 5 h. FAME recovery under these conditions was 92.1% of theoretical. In the third step, alkaline catalyzed transesterification process converts the triglycerides to its mono-esters and glycerol. The optimized variables, 6:1 methanol/oil (mol/mol) with 1% NaOH (wt.%) reacted at 65 C for 1 h, giving a maximum ester yield of 94%. Five important fuel properties of FAME from the OS-SS mixture were found to be comparable to those of No. 2 diesel fuel and conforming to both the American and German standards for biodiesel. (c) 2007Elsevier B.V. All rights reserved.