Biodiesel (fatty acid methyl esters), which is derived from triglycerides by transesterification with methanol, has attracted considerable attention during the past decade as a renewable, biodegradable, and nontoxic fuel. Several processes for biodiesel fuel production have been developed, among which transesterification using alkali-catalysis gives high levels of conversion of triglycerides to their corresponding methyl esters in short reaction times. This process has therefore been widely utilized for biodiesel fuel production in a number of countries. Recently, enzymatic transesterification using lipase has become more attractive for biodiesel fuel production, since the glycerol produced as a by-product can easily be recovered and the purification of fatty methyl esters is simple to accomplish. The main hurdle to the commercialization of this system is the cost of lipase production. As a means of reducing the cost, the use of whole cell biocatalysts immobilized within biomass support particles is significantly advantageous since immobilization can be achieved spontaneously during batch cultivation, and in addition, no purification is necessary. The lipase production cost can be further lowered using genetic engineering technology, such as by developing lipases with high levels of expression and/or stability towards methanol. Hence, whole cell biocatalysts appear to have great potential for industrial application.