In situ transesterification, or "reactive extraction", of lipids in algal biomass has the potential to greatly simplify and reduce costs of the production of algal biodiesel, as it reduces the number of unit operations by contacting the biomass directly with the alcohol and catalyst required to convert lipids to their alkyl esters (biodiesel). A design of experiments was conducted to understand the impact of process variables in the production of Fatty Acid Methyl Ester (FAME) from Chlorella vulgaris microalgae. Three process variables (catalyst ratio, solvent ratio and reaction time) were studied, based on their process significance. The maximum FAME recovery of 77.6 +/- 2.3 wt% was obtained at a reaction time of 75 min, using a catalyst: lipid (NaOH) molar ratio of 0.15:1 and a methanol: lipid molar ratio of 600:1. Additional experiments were performed at the optimum methanol ratio (600: 1) to compare results obtained using an alkaline catalyst with an acid catalyst. In terms of time, the alkaline catalyst (sodium hydroxide) outperformed the acid catalyst (sulphuric acid) obtaining higher conversions at lower reaction times. Nevertheless, using an acid catalyst ratio of 0.35:1 for longer reaction times resulted in higher conversions, up to 96.8 +/- 6.3 wt%, and may have facilitated the breakage of microalgae cell walls. In conclusion, the alkaline in situ transesterification of algal biomass can achieve high conversion in less time than an acid catalyst, using a lower ratio of catalyst. The final selection of the type of catalyst will depend on the characteristics (batch vs continuous) and cost of the in situ transesterification including catalyst and methanol costs, and the downstream processes required to obtain a saleable biodiesel. (C) 2011 Elsevier Ltd. All rights reserved.