This study investigated the possibility of utilizing detoxified sugarcane bagasse hydrolysate (DSCBH) as an alternative carbon source to culture Yarrowia lipolytica Po1g for microbial oil and biodiesel production. Sugarcane bagasse hydrolysis with 2.5% HCl resulted in maximum total sugar concentration (21.38 g/L) in which 13.59 g/L is xylose, 3.98 g/L is glucose, and 2.78 g/L is arabinose. Detoxification of SCBH by Ca(OH)(2) neutralization reduced the concentration of 5-hydroxymethylfurfural and furfural by 21.31% and 24.84%, respectively. Growth of Y. lipolytica Po1g in DSCBH with peptone as the nitrogen source gave maximum biomass concentration (11.42 g/L) compared to NH(4)NO(3) (6.49 g/L). With peptone as the nitrogen source. DSCBH resulted in better biomass concentration than is-glucose (10.19 g/L), D-xylose (9.89 g/L) and NDSCBH (5.88 g/L). The maximum lipid content, lipid yield and lipid productivity of Y. lipolytica Po1g grown in DSCBH and peptone was 58.5%, 6.68 g/L and 1.76 g/L-day, respectively. (C) 2011 Elsevier Ltd. All rights reserved.