Search for an alternative to the fossil fuels continuously grows; microalgae have emerged as a promising renewable feedstock for biodiesel. Many species contain high concentration of lipids and require simple cultivation methods than traditional crops for the production of biofuels. Microalgae have the ability to produce number of biofuels such as bioethanol, biodiesel, bio-hydrogen, etc. Production of biofuels from microalgae is considered as a potential process to meet the demand of future energy as microalgae can be cultivated year by year. But biofuels such as biodiesel production from microalgae comprised of several steps which includes various methods of harvesting and lipid extraction. This review provides an overview of production of biodiesel from microalgae, factors affecting the growth of algal biomass, various harvesting methods utilized for microalgae and lipid extraction methods for the production of biodiesel.