Microbial oils are among the most attractive alternative feedstocks for biodiesel production. In this study, a newly isolated yeast strain, AM113 of Papiliotrema laurentii, was identified as a potential lipid producer, which could accumulate a large amount of intracellular lipids from hydrolysates of inulin. P. laurentii AM113 was able to produce 54.6% (w/w) of intracellular oil in its cells and 18.2 g/l of dry cell mass in a fed-batch fermentation. The yields of lipid and biomass were 0.14 and 0.25 g per gram of consumed sugar, respectively. The lipid productivity was 0.092 g of oil per hour. Compositions of the fatty acids produced were C-14:0 (0.9%), C-16:0 (10.8%), C-16:1 (9.7%), C-18:0 (6.5%), C-18:1 (60.3%), and C-18:2 (11.8%). Biodiesel obtained from the extracted lipids could be burnt well. This study not only provides a promising candidate for single cell oil production, but will also probably facilitate more efficient biodiesel production.