Samples of unicellular microalgae were collected from different locations of Pune city of Maharashtra state, India (Latitude 18.5203° N, Longitude 73.8567° E). The microalgae isolate was selected based on its morphology and ease of cultivation at our test conditions. By further microscopic analysis this culture was identified as strain of Chlorella vulgaris. On carrying out media optimization using different media’s it was seen that Chlorella showed best growth in Modified Chu’s 10 medium. The isolated organism was further cultured and examined for morphological features, chlorophyll content, total carbohydrate content and total protein content. Biomass estimation at various stages of growth was done. Nile red staining for lipid determination indicated that lipid bodies are present in Chlorella vulgaris. Lipid estimation was done by single step method and it was seen that maximum lipid accumulation was obtained at 25th day of growth. Further it was seen that highest lipid accumulated at 8th concentration of nitrogen limitation. Biodiesel was extracted by direct trans esterification method. Cow dung can be used as a cheap source for large scale production of microalgae.