Large amount of palm mill effluent is generated annually. The waste would be potential for production of single cell oils (SCOs). The objective of study was to evaluate the lipid accumulation by fungi using palm mill effluent as substrate. To obtain most potential strains for lipid accumulation, seven filamentous fungi isolated from various biomes were evaluated for their ability to produce endoglucanase, and its lipid accumulation. Fungal hypae grown on palm oil mill effluent accumulated lipid of 34,3-87,5 of their dry cell mass. The profile of transesterified SCOs revealed a high content of saturated and monounsaturated fatty acids i.e., palmitic (C16:0), stearic (C18:0) and oleic (C18:1) acids similar to conventional vegetable oils used for biodiesel production. The strain was able to use organic substrates in POME implies that they are promising strain for biofuel feed stock as well as for meeting effluent quality for wastewater discharge.