The effect of storage temperature and time on lipid composition of Scenedesmus sp. was studied. When stored at 4°C or higher, the free fatty acid content in the wet biomass increased from a trace to 62.0% by day 4. Using two-step catalytic conversion, algae oil with a high free fatty acid content was converted to biodiesel by pre-esterification and transesterification. The conversion rate of triacylglycerols reached 100% under the methanol to oil molar ratio of 12:1 during catalysis with 2% potassium hydroxide at 65°C for 30min. This process was scaled up to produce biodiesel from Scenedesmus sp. and Nannochloropsis sp. oil. The crude biodiesel was purified using bleaching earth. Except for moisture content, the biodiesel conformed to Chinese National Standards.