BACKGROUND Rhodosporidium toruloides can transform carbohydrates from lignocellulosic hydrolyzate into long-chain fatty acids that contribute to biodiesel production. However R. toruloides cannot survive in lignocellulosic hydrolyzate due to the inhibitory effects of the byproducts co-produced by hydrolysis. RESULTS To circumvent the limitation, atmospheric room temperature plasma (ARTP) mutagenesis was utilized to obtain R. toruloides mutant strains M11, M14, and M18 that had strong tolerance for the inhibitory compounds and could grow in lignocellulosic hydrolyzate without detoxification. It was demonstrated that acetic acid and vanillin (phenolic compounds) were major inhibitors that decreased lipid productivity by 30%. Furthermore, acetic acid and vanillin changed the fatty acid composition of the lipids. Among the mutants, M18 exhibited the highest tolerance for all the inhibitory compounds and had near 50% lipid content. CONCLUSIONS This work provides novel potential strains for biodiesel production using lignocellulosic biomass and a useful foundation for optimization of the pretreatment of lignocellulose. (c) 2013 Society of Chemical Industry