In the present study, the oil extracted from the microalga Neochloris oleoabundans was used for producing biodiesel. The viscosity of microalgal oil was very high so transesterification was done by an ultrasonic method and a simple basic method. Free fatty acid content in oil was found high so a two-step transesterification reaction was used. Maximum yield of algal oil methyl ester was acquired by the ultrasonic method (98%) with improved physicochemical characteristics, whereas the biodiesel yield obtained by simple transesterification process was low (91%). The maximum oil content in N. oleoabundans was found to be 42% and major fatty acids include palmitic acid, oleic acid, and linoleic acid. Finally, it was conferred that the ultrasonic-assisted transesterification method is the best technique for biodiesel production from microalgal oil.