To minimize the cost of biodiesel production, massively available biomass, rice straw was selected as starting material for fermentation by oleaginous yeast, Lipomyces starkeyi. Acid hydrolysis was carried out to obtain Rice Straw Hydrolysates (RSH). Maximum amount of glucose was liberated with 3.5% H2SO4. Highest levels of biomass (~12 g/L) and lipid content (~36%) of L. starkeyi were obtained through fermentation of RSH produced with 3.5% H2SO4. The optimum pH for biomass yield and lipid accumulation of L. starkeyi was 6.0. Periodic supplementation of fresh RSH increased lipid content and lipid yield approximately15% and 40%, respectively. The growth and lipid accumulation of L. starkeyi were enhanced when carbon and nitrogen sources were supplemented with RSH. Gas chromatographic analysis revealed that the lipid obtained from L. starkeyi cultivated with RSH was composed of saturated and unsaturated fatty acids. The fatty acid composition of this microbial lipid is similar to that of vegetable oils. The results reported herein indicate that rice straw might be a valuable alternative feedstock for microbial lipids production by L. starkeyi for biodiesel synthesis.