Volatile fatty acids (VFAs) that can be derived from food wastes were used for microbial lipid production by Chlorella protothecoides in heterotrophic cultures. The usage of VFAs as carbon sources for lipid accumulation was investigated in batch cultures. Culture medium, culture temperature, and nitrogen sources were explored for lipid production in the heterotrophic cultivation. The concentration and the ratio of VFAs exhibited significant influence on cell growth and lipid accumulation. The highest lipid yield coefficient and lipid content of C. protothecoides grown on VFAs were 0.187 g/g and 48.7%, respectively. The lipid content and fatty acids produced using VFAs as carbon sources were similar to those seen on growth and production using glucose. The techno-economic analysis indicates that the biodiesel derived from the lipids produced by heterotrophic C. protothecoides with VFAs as carbon sources is very promising and competitive with other biofuels and fossil fuels.