Increasing oil prices and climate change concerns, biodiesel has gained attention as an alternative energy source. Biodiesel derived from microalgae is a potentially renewable and carbon neutral alternative to petroleum fuels. One of the most important decisions in obtaining oil from microalgae is the choice of algal species to use. Seven microalgae from a total of 18 isolated cultures were selected as based on their purity and growth rates. Seven cultures were identified as Chlorella sp., Haematococcus sp., Chlorococcum sp., Scenedesmus sp., Rivularia sp., Neochloris sp. and Nostoc sp. Based on the higher lipid production, three species such as Chlorella sp. (25.8 +/- 0.15%), Chlorococcum sp. (27.0 +/- 0.25%) and Scenedesmus sp. (29.7 +/- 0.32%) were selected for further studies. An efficient lipase producing Pseudomonas sp. was isolated and used for biological transesterification studies for microalgal oil conversion. Immobilized lipase from Pseudomonas sp. and chemical transesterification by NaOH were tried. Fatty acid methyl esters (FAMEs) were analysed by GC-MS which showed that Chlorococcum sp. crude oil contained C35H46O8 as the major constituent. In transesterification studies, C50H82O9 was identified by chemical method whereas two compounds such as C36H56O6 and C24H28N2O5 were identified through biological transesterification. Hence the tested seven microalgal species, Chlorococcum sp. was more suitable for the production of good quality biodiesel.