Five indigenous microalgal strains of Scenedesmus, Chlorococcum, Coelastrum, and Ankistrodesmus genera, isolated from Indian fresh water habitats, were studied for carbon-dioxide tolerance and its effect on growth, lipid and fatty acid profile. Scenedesmus dimorphus strain showed maximum growth (1.5 g/L) and lipid content (17.83% w/w) under CO2 supplementation, hence selected for detailed evaluation. The selected strain was alkaline adapted but tolerated (i) wide range of pH (5-11); (ii) elevated salinity levels (up to 100 mM, NaCl) with low biomass yields and increased carotenoids (19.34 mg/g biomass); (iii) elevated CO2 levels up to 15% v/v with enhancement in specific growth rate (0.137 d(-1)), biomass yield (1.57 g/L), lipid content (19.6% w/w) and CO2 biofixation rate (0.174 g L-1 d(-1)). Unsaturated fatty acid content (alpha linolenic acid) increased with CO2 supplementation in the strain. (C) 2013 Elsevier Ltd. All rights reserved.