During lipase-catalyzed biodiesel production, it has been demonstrated that by-product glycerol had negative effect on the catalytic performance of lipase especially in the repeated uses. This work presents a novel process by introducing dimethyl carbonate (DMC) into lipase-mediated methanolysis in due time, where DMC reacts with by-product glycerol and release methanol simultaneously, which not only realizes the in-situ removal of glycerol, but also achieves higher biodiesel yield at shorter reaction time compared to only use DMC as the acyl acceptor. At the optimized condition a biodiesel yield of 95.3% could be achieved with glycerol concentration only 0.049%. Improved reusability of lipase was given and there was a negligible loss in lipase's activity after its being consecutively used for 6 batches. This process for in-situ removal of glycerol during lipase-catalyzed methanolysis was prospective for practical application in biodiesel industry.