Microbial production routes, notably whole-cell lipase-mediated biotransformation and fatty-acids-derived biosynthesis, offer new opportunities for synthesizing biodiesel. They compare favorably to immobilized lipase and chemically catalyzed processes. Genetically modified whole-cell lipase-mediated in vitro route, together with in vivo and ex vivo microbial biosynthesis routes, constitutes emerging and rapidly developing research areas for effective production of biodiesel. This review presents recent advances in customizing microorganisms for producing biodiesel, via genetic engineering of lipases and metabolic engineering (including system regulation) of fatty-acids-derived pathways. Microbial hosts used include Escherichia coli, Saccharomyces cerevisiae, Pichia pastoris and Aspergillus oryzae. These microbial cells can be genetically modified to produce lipases under different forms: intracellularly expressed, secreted or surface-displayed. They can be metabolically redesigned and systematically regulated to obtain balanced biodiesel-producing cells, as highlighted in this study. Such genetically or metabolically modified microbial cells can support not only in vitro biotransformation of various common oil feedstocks to biodiesel, but also de novo biosynthesis of biodiesel from glucose, glycerol or even cellulosic biomass. We believe that the genetically tractable oleaginous yeast Yarrowia lipolytica could be developed to an effective biodiesel-producing microbial cell factory. For this purpose, we propose several engineered pathways, based on lipase and wax ester synthase, in this promising oleaginous host.