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Both the energy shortage and pollution tend to slow down economic development and affect our daily lives. Some microorganisms not only can digest pollutants, but also can convert pollutant metabolites to triacylglycerol (TAG) that can be used to produce biodiesel. Here, we present results showing that the bacterium strain LDS5, a mutant of Rhodococcus sp. RHA1 (RHA1) generated in our lab, could grow well in chemithermomechanical pulping (CTMP) effluent, a type of paper mill wastewater, reduce chemical oxygen demand (CODCr) and biochemical oxygen demand (BOD5) significantly, and produce TAG. Our data suggest that this strain has the potential to be used in paper mill wastewater treatment as well as in the development of biodiesel using biomass from paper mills.