Bioprospecting of microalgae capable of growing and accumulating high amounts of lipids in high salinity conditions such as seawater can substantially improve the economic vaibaility of algal biodiesel production. In view of this, a fresh water microalga, Scenedesmus sp. IITRIND2, was cultivated under saline conditions to assess its halotolerant behavior and potential as biodiesel feedstock. The microalga efficiently adapted to 100% seawater salinity, enhanced its lipid content by 52%, thus yielded similar to 3.2 fold higher lipid productivity as compared to the Bold's basal media (BBM). The increase in the lipid content was balanced by a sharp decrease in its protein and carbohydrate content. Biochemical analysis evidenced that salinity induced oxidative stress resulted in reduced levels of photosynthetic pigments, elevated levels Of reactive oxygen species (H2O2, thiobarbituric acid reactive substances), osmolytes (proline, glycine betaine), and activity of antioxidant enzymes (catalase, ascorbate peroxidase). These studies suggested that microalga efficiently modulated its metabolic flexibility in order to acdatamize the salanity induced stress. Further, the FAME analysis revealed the dominance of C14:0, C16:0, C18:0, C1,8:1, and C18:2 fatty acids under halotolerant conditions, and the properties of the resulting biodiesel were in compliance with ASTM (American Society for Testing Materials) D6751 and EN 14214 (European) fuel standards. These results consolidate that the lipid augmented halotolerant algal strains capable of growing in saline/seawater can be formulated as environmental sustainable and economic viable sources for biodiesel production.