In present study, statistical optimization of biodiesel–derived crude glycerol fermentation to DHA by immobilized G. oxydans cells over polyurethane foam is reported. Effect of DHA (product) inhibition on crude glycerol fermentation was analyzed using conventional biokinetic models and new model that accounts for both substrate and product inhibition. Optimum values of fermentation parameters were: pH = 4.7, temperature = 31 °C, initial substrate concentration = 20 g/L. At optimum conditions, DHA yield was 89% (17.83 g/L). Effect of product inhibition on fermentation was trivial for DHA concentrations ≤30 g/L. At higher concentrations (≥50 g/L), kinetics and yield of fermentation showed marked reduction with sharp drop in V_max and K_S values. Inhibition effect was more pronounced for immobilized cells due to restricted transport of fermentation mixture across polyurethane foam. Retention of fermentation mixture in immobilized matrix resulted in higher localized DHA concentration that possibly enhanced inhibition effect.