Glycerol and rapeseed meal, two major by-products of biodiesel production, have been tested for possible use as low-cost raw materials for the production of microbial bio-oil using the oleaginous yeast Rhodosporidium toruloides. Using fed-batch fermentation with crude glycerol and a novel nitrogen rich nutrient source derived from rapeseed meal as feed, it was shown that 13 g/L lipids could be produced, compared with 9.4 g/L when crude glycerol was used with yeast extract. When 100 g/L pure glycerol was used, the final lipid concentration was 19.7 g/L with the novel biomedium compared to 16.2 g/L for yeast extract. The novel biomedium also resulted in higher lipid yields (0.19 g lipid/g glycerol consumed compared to 0.12 g/L) suggesting it provides a better carbon to nitrogen balance for accumulating lipids. FAMEs produced from the microbial lipids indicated a high degree of unsaturation confirming that the fatty acids produced from the novel biomedium have potential for biodiesel production.