A preliminary research for feasible and economical bioprocess for biodiesel production was carried out. A microorganism producing lipase was isolated from grease-contaminated soil. After chemically mutating twice, the microorganism exhibited 2.5 times higher intracellular lipase activities than wild type one and was used as a whole cell biocatalyst for biodiesel production. 0.1% toluene treatment followed by freeze drying was the optimum preparation method for whole cell biocatalyst. 1 g whole cell biocatalyst corresponded to 0.15 g commercial enzyme under mild methanol inhibition condition, while corresponding to 0.7 g enzyme under severe methanol inhibition environment. A two-step process, biodiesel production by the whole cell and sequentially by commercial enzyme, was suggested. This novel process, combining the advantages of whole cell and enzyme, saved the usage of commercial enzyme and alleviated enzyme deactivation by methanol.