A technique to produce biodiesel from Caulerpa peltata algal oil having high free fatty acids (FFA) has been developed. The algal oil was extracted from C. peltata biomass and extracted algal oil was converted into biodiesel by two-step process under ultrasonic irradiation. The first pretreatment step was carried out to reduce acid value from 19.35 to 0.51 mg KOH/g with 2% H2SO4, 15:1 methanol-to-oil molar ratio, 30 min at 65 degrees C under 500 rpm. The pretreated algal oil was subjected to transesterification and achieved highest conversion of 98.11% with optimized parameters of 1% NaOH, 12:1 methanol-oil molar ratio, 600 rpm at 60 degrees C for 16 min. The fuel properties of biodiesel were found to be within the limits of American standards. Consequently, C. peltata appears as a renewable raw-material for biodiesel production. (C) 2014 Elsevier Ltd. All rights reserved.