The major challenges which large scale biofuel industries facing are nutrient supply, harvesting and lipid extraction.The high cost of algal biofuel production makes it economically not feasible for commercial use. Oleaginous microbes arepreferred for biofuel production, as they will be having lipid content more than 20 per cent of their dry weight. Among theother microbes, yeasts are most preferred as they have high lipid content and relatively faster growth rate. Microalgae arealso advantageous as potential lipid producers and are capable of producing lipid via photosynthesis. Mixed cultivation ofyeast with microalgae can be preferred to carry out an improved lipid production as microalgae in a medium act as an oxygenproducer for the yeast cells, while yeast will provide carbon dioxide to microalgae. This consortium of yeast and microalgaeproduce lipid with more saturated fatty acids, high oxidative stability, make harvesting easy and also be grown in wastewaterwhich indicates its potential use as an economical biodiesel feedstock.