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Within the bioremediation framework, this study was aimed at finding out the optimal amount of sludge waste consumption and microalgal growth conditions of Neochloris oleoabundans in order to reach a significant fat production and chemical transformation of microalgal lipids into biodiesel. The effects of the lipid extraction methods – using ionic liquids and chloroform – on the total amount of fat, the individual fatty acid concentrations, and the biodiesel properties were assessed and compared to the EN 14214 and ASTM D6751−02 biodiesel standards. The microalgae strains grown in the optimized sludge waste medium with a dilution of 0.65 g/L wet sludge, and extracted by ionic liquid:chloroform mixed solvent, resulted being the most significant strains to obtain the highest quality of biodiesel with a density of 0.887 g cm−3, kinematic viscosity of 4.7 mm2 s−1, higher heating value of 40.21 MJ kg−1, iodine value of 107.3 g I2 100 g−1 fat, and cetane number of 50.