In this study, we used Chlorella vulgaris (C.vulgaris) grown in the dairy wastewater as biomass to produce a third-generation biodiesel. The lipids were extracted from the biomass and the biodiesel obtained by transesterification. Following ASTM and EN guidelines, the biodiesel was assessed along with its density, viscosity, heating value, and flash point. Gas chromatography was used to evaluate the concentration, composition, and type of fatty acid methyl esters. The results showed a biodiesel yield of 93% with a composition of 33% saturated, 28% monounsaturated, and 37% polyunsaturated. Engine testing was carried out to monitor the levels of CO, CO2, NOx, and smoke emissions as well as to assess the biodiesel performance. Results demonstrate the possibility of producing third-generation biodiesel from C. Vulgaris cultivated in dairy wastewater. The proposed process valorize the dairy wastewater and might represent an alter-native approach for biodiesel production and the disposal of the wastewater.